PVH Corp (PVH, Financial) has recently shown a notable daily gain of 6.86%, complemented by a three-month gain of 17.02%. With an Earnings Per Share (EPS) of $2.94, investors are contemplating whether the stock is fairly valued. This article delves into PVH's valuation, offering a detailed analysis to help investors determine the stock's intrinsic worth.
PVH Corp (PVH, Financial), a prominent player in the branded apparel industry, operates in over 40 countries. Its portfolio, dominated by renowned brands such as Calvin Klein and Tommy Hilfiger, encompasses men's dress shirts, sportswear, underwear, and jeans. Having streamlined its brand offerings in 2021, PVH focuses on e-commerce, a global network of approximately 1,500 stores, licensing, and wholesale distribution. With roots dating back to 1881, the New York City-based company has built a significant presence in the fashion world. Currently, with a stock price of $97.78 and a Fair Value (GF Value) of $94.25, we assess whether PVH stands as a fair investment opportunity.
Summarize GF Value
The GF Value is a unique valuation metric that represents a stock's intrinsic value, incorporating historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. For PVH, the GF Value Line suggests the stock is currently fairly valued. With a market cap of $6.30 billion, the stock's price aligns closely with our calculated fair value. Such alignment indicates that the long-term return of PVH's stock is likely to mirror the company's business growth rate.
Financial Strength Assessment
The financial strength of a company is a crucial consideration for investors to avoid the risk of capital loss. PVH's cash-to-debt ratio stands at 0.1, which is lower than 75.25% of its peers in the Manufacturing - Apparel & Accessories industry. Despite this, PVH's financial strength has been rated a solid 6 out of 10 by GuruFocus, indicating a fair level of financial stability.
Profitability and Growth Perspectives
A company's profitability is often a harbinger of its risk profile and performance potential. PVH has maintained profitability for 9 out of the past 10 years, boasting a commendable operating margin that surpasses 68.59% of its industry counterparts. This profitability, combined with annual revenues of $9.10 billion and an EPS of $2.94, positions PVH favorably in the market. However, growth remains a concern, with PVH's 3-year average annual revenue growth lagging behind more than half of its industry peers. The company's EBITDA growth rate also falls short when compared to the industry average.
ROIC vs. WACC Analysis
The comparison between a company's Return on Invested Capital (ROIC) and its Weighted Average Cost of Capital (WACC) can reveal its value-creating capabilities. PVH's ROIC is currently at 4.25, which is below its WACC of 9.3, suggesting that the company may not be generating sufficient returns on its investments.
In conclusion, PVH Corp (PVH, Financial) appears to be fairly valued, with a balanced financial condition and reasonable profitability. However, its growth and value-creation capabilities warrant careful consideration. Investors interested in PVH can gain further insights by exploring the company's 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.