Business Corpus: Calvin Klein Parent PVH Beats But Guides Q3 Low, Warns On VolatilityPVH topped Q2 forecasts late Wednesday, but Q3 guidance was weak as the Calvin Klein parent warned of increased economic and political turbulence. The post Calvin Klein Parent PVH Beats But Guides Q3 Low, Warns On Volatility appeared first on Investor's Business Daily.

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PVH (PVH) topped Q2 forecasts late Wednesday, but Q3 guidance was weak as the Calvin Klein parent warned of increased economic and political turbulence.

PVH Earnings

Estimates: Analysts expect PVH earnings per share to jump 25% to $2.11, according to Zacks Investment Research. Revenue is seen swelling 9% to $2.26 billion.

Results: EPS of $2.18 on revenue of $2.33 billion. Calvin Klein revenue increased 18% to $925 million, while comps were up 5% in Europe and Asia, and up 2% in North America. At Tommy Hilfiger revenue was up 15% to $1 billion, with international comps up 11% and North American comps up 5%. However, Heritage Brands revenue was down 3% to $380 million, despite same store sales rising 3%.

Outlook: Q3 EPS is seen at $3.10 to $3.13, below views for $3.15, on revenue growth of 7%. Full-year EPS is now seen at $9.20-$9.25, above consensus for $9.18 and up from a prior view of $9.05-$9.15. Revenue is seen growing 7%, up from a prior view for 6% growth.

"We are increasing our revenue and earnings guidance for the year, while continuing to take a prudent approach to planning our business in the second half of the year, as we experience increasing macroeconomic and geopolitical volatility around the world," Chairman and CEO Emanuel Chirico said in a press release.

Back in May, PVH stock fell after it gave weak full-year profit guidance. This was despite a Piper Jaffray survey showing its Tommy Hilfiger and Calvin Klein makes were among the brands that "made significant upward moves" in popularity.

PVH Stock

PVH slipped 1.7% late. Shares close up 0.5% at 156.77 on the stock market today. Over the past 12 weeks PVH stock has formed a flat base, but it still remains far from its buy point of 169.32.

However a common pitfall for new and experienced investors alike is to buy a stock just ahead of its earnings report because it's "acting right." This is why IBD introduced this options strategy to limit risk around earnings.

The flat base reflects unusual strength. Instead of bending lower in a weak market, a stock won't cede much ground. This means a stock wants to run higher.

However PVH stock's relative strength line has been moving sideways since the end of June. The share price is up 14% so far in 2018. In addition the stock has solid fundamentals. This is reflected in its good, but not ideal, IBD Composite Rating of 84.

It is a big week for apparel retail stocks. American Eagle Outfitters (AEO) stock sank on disappointing guidance Wednesday, while Lululemon (LULU), Abercrombie & Fitch (ANF) and Burlington Stores (BURL) report Thursday.

PVH In Fashion With Analysts

Deutsche Bank managing director Paul Trussell was rating the stock as a buy with a 171 price target going into earnings.

"While we recognize the impact of reversing currency tailwinds, we still see room for the beat & raise story to persist through very strong organic trends," the analyst said in a research note. "Especially with the global Calvin Klein marketing campaign clearly bearing fruit and well positioned into the back half of the year with the new Kardashian/Jenner family ads just released."

Meanwhile Wells Fargo senior analyst Ike Boruchow was also bullish, and he believes concerns over the stock's exposure to Europe are overblown.

"First, Calvin and Tommy's European order books are set (CK +25% and TH +10%) and those revenues should be locked in," he said in a research note. "Second, the organic top-line for PVH has trended 9%-10% in 1H and the implied guidance for 2H is closer to 2%-3% — meaning there is a meaningful deceleration built into plan already."

The analyst believes this built-in deceleration is larger than what will actually occur. He is rating the stock as outperform with a price target of 180.

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The post Calvin Klein Parent PVH Beats But Guides Q3 Low, Warns On Volatility appeared first on Investor's Business Daily.