Can PVH Corp.'s (PVH) Q2 Earnings Maintain Solid Trend?

PVH Corp. PVH is slated to release second-quarter fiscal 2016 results on Aug 24, after the closing bell. Last quarter, the company delivered a positive earnings surprise of 4.9%. In fact, it has outperformed the Zacks Consensus Estimate for eight straight quarters now, with an average of 5.9% over the trailing four quarters. Let’s see how things are shaping up for this announcement.

PVH CORP Price and EPS Surprise

 

PVH CORP Price and EPS Surprise | PVH CORP Quote

Factors Influencing this Quarter

PVH’s continues to gain from the solid performance of its Calvin Klein and Tommy Hilfiger brands, which helped the company to deliver strong results even amid tough macroeconomic conditions. Apart from this, PVH’s solid business strategies and ongoing investments in top-quality brands, along with its focus on global expansion bode well. In fact, these factors also encouraged management to raise its fiscal 2016 outlook, as it remains confident of its strategic endeavors. However, adverse foreign currency movements, volatility in global consumer spending and a tough promotional retail environment, remain concerns. So let’s see if PVH can keep its solid earnings streak alive in the quarter to be reported.

For the second quarter of fiscal 2016, the company had projected total revenue to rise 4% year over year, while currency neutral revenue is anticipated to increase 5%. Adjusted earnings per share for the second quarter are envisioned to be in the range of $1.25–$1.30, including a 45 cents negative impact from currency translations. On a currency neutral basis, adjusted earnings growth is expected in a band of 24%–28%.

Earnings Whispers

Our proven model does not conclusively show that PVH is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for PVH is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at $1.28.

Zacks Rank: PVH’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Sanderson Farms, Inc. SAFM scheduled to report earnings on Aug 25, currently has an Earnings ESP of +4.96% and a Zacks Rank #1 (Strong Buy).

Dollar Tree, Inc. DLTR, scheduled to report earnings on Aug 25, currently has an Earnings ESP of +4.11% and a Zacks Rank #2 (Buy).

Star Bulk Carriers Corp. SBLK, expected to report earnings on Aug 29, currently has an Earnings ESP of +13.33% and a Zacks Rank #2.

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