PVH Earnings: More Signs of Progress Despite Macroeconomic Concerns; Shares Very Undervalued

Although no-moat PVH’s second-quarter profitability surpassed our forecast, its shares sank by a mid-single-digit percentage on Aug. 28 as difficult market conditions in North America, Europe, and China may weigh on third-quarter sales. Even so, the firm’s 2024 earnings per share guidance is essentially unchanged. As such, we do not expect to make any material change to our $145 fair value estimate, leaving shares very attractive. We think PVH’s valuation is low considering its disposition of most of its low-margin heritage brands, the worldwide appeal of its two major brands, and its potential for better margins and sales growth.