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Brand Strength Likely to Aid PVH Corp (PVH) in Q3 Earnings

We expect the designer and marketer of branded apparel, footwear and other accessories, PVH CorporationPVH to beat expectations when it reports third-quarter fiscal 2017 results on Nov 29. In the last quarter, the company delivered a positive earnings surprise of 2.4%.

In fact, the company surpassed estimates in the trailing four quarters with an average positive surprise of 3.6%.

What to Expect?

The question lingering in investors' minds now is whether PVH Corp. will be able to post positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for the quarter under review is $2.92 per share, reflecting growth of 12.1% from the year-ago quarter. We note that the Zacks Consensus Estimate for the quarter has been stable in the last 30 days. Analysts polled by Zacks anticipate revenues of $2.33 billion, up 3.8% from the year-ago quarter.

PVH Corp. Price, Consensus and EPS Surprise

PVH Corp. Price, Consensus and EPS Surprise | PVH Corp. Quote

Moreover, we note that the stock has outperformed the industry in the last three months. The company's shares have increased 13.4%, while the industry grew 4.5%.

Factors at Play

PVH Corp.'s solid show even in the face of an uncertain macro environment mainly reflects the strength of its premium brands - Calvin Klein and Tommy Hilfiger. The Zacks Consensus Revenue Estimate for Calvin Klein and Tommy Hilfiger are pegged at $861 million and $924 million, respectively, reflecting significant growth from the prior-year quarter.

Apart from its diversified brand portfolio, the company has been gaining from the impressive trends at its international business. Management believes that the company's superb execution, continued investments in brands and international platforms remain growth drivers. Also, keeping pace with the evolving trends and undertaking necessary initiatives to stay afloat in the current business scenario is likely to help the company sustain its solid momentum.

Driven by the solid quarterly results, improvement in foreign currency rates and continued strength across its brands, management expects to deliver a robust second-half performance. Consequently, the company raised earnings outlook for fiscal 2017. It now envisions earnings in the range of $7.60-$7.70 per share compared with $7.40-$7.50 expected earlier.

Further, revenues are projected to increase 6% for the fiscal year while currency neutral revenues are expected to grow 5%. Earlier, the company forecasted revenue growth of 3%.

However, concerns regarding the volatile macroeconomic and geopolitical environment remain. While currency rates improved in second quarter, currency headwinds are expected to hurt fiscal 2017 earnings by 20 cents per share. Apart from this, a volatile retail scenario and greater marketing costs may hurt performance.

What the Zacks Model Unveils?

Our proven model shows that PVH Corp. is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Earnings ESP of +0.06% and the company's Zacks Rank #3 makes us reasonably confident of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Other Stocks Poised to Beat Earnings Estimates

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

Zumiez Inc. ZUMZ currently has an Earnings ESP of +0.69% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

American Eagle Outfitters Inc. AEO has an Earnings ESP of +1.04% and a Zacks Rank #2.

The Kroger Company KR currently has an Earnings ESP of +0.31% and a Zacks Rank #3.

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Zumiez Inc. (ZUMZ): Free Stock Analysis Report

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Kroger Company (The) (KR): Free Stock Analysis Report

PVH Corp. (PVH): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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