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Morningstar

PVH's Story a Good One, but Shares Fairly Priced

The narrow-moat apparel maker capitalized on strong consumer demand during the latest quarter.

Narrow-moat

We expect to increase our $135 fair value estimate in the mid-single-digit range as we now see the company poised to reach a 12% adjusted operating margin in the long term given mix shifts to higher margin international revenue streams and scale (versus our current 11% estimate). We still see top-line constant currency revenue growth in the 3% to 4% range over the next five years (versus 2018 guidance for 4% constant currency growth) as we believe digital and international opportunities will propel levels north of our low-single-digit U.S. apparel sales growth estimate. That said, we think the market has correctly assessed this opportunity and view shares as fairly valued.

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About the Author

Bridget Weishaar

Senior Equity Analyst

Bridget Weishaar is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers apparel retailers.

Before joining Morningstar in 2013, Weishaar spent five years as an equity analyst on the Internet research team at J.P. Morgan. She also worked as a retail analyst for Bear Stearns.

Weishaar holds a bachelor’s degree in science pre-professional studies from the University of Notre Dame and a master’s degree in business administration from The Wharton School of the University of Pennsylvania.

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