PVH Corp Valuation – August 2016 $PVH

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today - July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how PVH Corp (PVH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): PVH Corp. is an apparel company. The Company’s segments include Calvin Klein North America; Calvin Klein International; Tommy Hilfiger North America; Tommy Hilfiger International; Heritage Brands Wholesale, and Heritage Brands Retail. The Company’s brand portfolio consists of various brand names, including Calvin Klein, Tommy Hilfiger, Van Heusen, IZOD, ARROW, Warner’s, Olga and Eagle, which are owned, and Speedo, Geoffrey Beene, Kenneth Cole New York, Kenneth Cole Reaction, Sean John, MICHAEL Michael Kors, Michael Kors Collection and Chaps, which are licensed, as well as various other licensed and private label brands. The Company designs and markets dress shirts, neckwear, sportswear, jeanswear, intimate apparel, swim products and handbags, footwear and other related products, and licenses its owned brands over a range of products. The Company sells its brands at multiple price points and across multiple channels of distribution and geographies.

PVH Chart

PVH data by YCharts

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of PVH – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,829,781,168 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.81 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 131.68% Pass
6. Moderate PEmg Ratio PEmg < 20 18.32 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.75 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.81 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.64 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

PVH value chart August 2016

EPSmg $5.68
MG Growth Estimate 8.30%
MG Value $142.57
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $82.33
MG Value based on 0% Growth $48.26
Market Implied Growth Rate 4.91%
Current Price $104.00
% of Intrinsic Value 72.95%

PVH Corp qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.65 in 2013 to an estimated $5.68 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.91% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into PVH Corp revealed the company was trading above its Graham Number of $93.46. The company pays a dividend of $0.15 per share, for a yield of 0.1% Its PEmg (price over earnings per share – ModernGraham) was 18.32, which was below the industry average of 26.26, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-42.67.

PVH Corp performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

PVH charts August 2016

Net Current Asset Value (NCAV) -$42.67
Graham Number $93.46
PEmg 18.32
Current Ratio 1.81
PB Ratio 1.75
Current Dividend $0.15
Dividend Yield 0.15%
Number of Consecutive Years of Dividend Growth 1


Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 4/1/2016
Total Current Assets $2,528,200,000
Total Current Liabilities $1,394,900,000
Long-Term Debt $2,991,600,000
Total Assets $10,885,100,000
Intangible Assets $7,381,000,000
Total Liabilities $6,022,800,000
Shares Outstanding (Diluted Average) 81,900,000

Earnings Per Share History

Next Fiscal Year Estimate $6.49
Jan2016 $6.89
Jan2015 $5.27
Jan2014 $1.74
Jan2013 $5.87
Jan2012 $3.78
Jan2011 $0.81
Jan2010 $3.08
Jan2009 $1.76
Jan2008 $3.21
Jan2007 $2.64
Jan2006 $1.85
Jan2005 $1.14
Jan2004 -$0.18
Jan2003 $1.08
Jan2002 $0.38
Jan2001 $1.10
Jan2000 $0.62
Jan1999 $0.43
Jan1998 -$2.46
Jan1997 $0.68

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $5.68
Jan2016 $5.08
Jan2015 $3.95
Jan2014 $3.21
Jan2013 $3.65
Jan2012 $2.54
Jan2011 $2.05
Jan2010 $2.61
Jan2009 $2.29
Jan2008 $2.28
Jan2007 $1.65
Jan2006 $1.05
Jan2005 $0.67
Jan2004 $0.49
Jan2003 $0.79
Jan2002 $0.44
Jan2001 $0.34

Recommended Reading:

Other ModernGraham posts about the company

27 Companies in the Spotlight This Week – 4/4/15
PVH Corporation Quarterly Valuation – April 2015 $PVH
5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – March 2015
5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – February 2015
PVH Corporation Quarterly Valuation – January 2015 $PVH

Other ModernGraham posts about related companies

American Eagle Outfitters Valuation – August 2016 $AEO
Hanesbrands Inc Valuation – August 2016 $HBI
VF Corp Valuation – August 2016 $VFC
L Brands Inc Valuation – July 2016 $LB
Michael Kors Holdings Ltd Valuation – July 2016 $KORS
Under Armour Inc Valuation – June 2016 $UA
Nike Inc. Valuation – May 2016 $NKE
Wolverine World Wide Inc Valuation – May 2016 $WWW
Ralph Lauren Corp Stock Valuation – February 2016 $RL
Gap Inc Valuation – February 2016 $GPS


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.