Is PVH (PVH) Now Attractive After A 33% One Year Share Price Decline

• If you are wondering whether PVH is priced attractively right now, it helps to step back and look at how the current share price lines up with a few different valuation yardsticks.
• The stock last closed at US$61.23, with returns of a 1.7% decline over 7 days, 10.2% decline over 30 days, 9.7% decline year to date, 33.2% decline over 1 year, 33.9% decline over 3 years and 29.6% decline over 5 years. This naturally raises questions about whether expectations or perceived risk have shifted.
• Against that backdrop, recent news coverage has focused on how traditional apparel brands like PVH are responding to changing consumer preferences, digital retail trends and competition from newer labels. This context helps frame whether the current share price is simply reflecting those pressures or if the market may be taking a more cautious stance than the fundamentals alone would suggest.
• PVH currently has a valuation score of 5/6, which we will unpack using different valuation approaches. Later in the article we will also look at a broader way of thinking about value that goes beyond a single score.

Find out why PVH's -33.2% return over the last year is lagging behind its peers.

Approach 1: PVH Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth today by projecting its future cash flows and then discounting those amounts back to a present value. It is essentially asking what those future dollars are worth in your hand right now.

For PVH, the model uses a 2 Stage Free Cash Flow to Equity approach, starting from last twelve months free cash flow of about $387.4 million. Analysts provide explicit forecasts out to 2027, with Simply Wall St extrapolating further to create a 10 year path of projected free cash flows. By 2035, the projection used in the model is $788.1 million, all in US$ terms.

When those projected cash flows are discounted back, the DCF model arrives at an estimated intrinsic value of about US$143.77 per share. Compared with the recent share price of US$61.23, this implies PVH trades at about a 57.4% discount to that DCF estimate, which indicates the shares appear materially undervalued on this model alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests PVH is undervalued by 57.4%. Track this in your watchlist or portfolio, or discover 877 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for PVH.

Approach 2: PVH Price vs Earnings

For a profitable company, the P/E ratio is a useful shorthand for how much investors are paying for each dollar of earnings. It lets you quickly compare what the market is willing to pay for PVH versus other stocks that also generate positive profits.

What counts as a "normal" P/E depends a lot on how the market views a company’s growth prospects and risk profile. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk usually goes with a lower one.

PVH currently trades on a P/E of 8.23x. That is well below the Luxury industry average of about 18.21x and also below the broader peer group average of 38.85x. Simply Wall St’s Fair Ratio for PVH is 18.89x, which is its proprietary estimate of what a reasonable P/E might be given factors such as earnings growth, profit margins, industry, market cap and company specific risks.

The Fair Ratio is more tailored than a simple comparison with peers or the industry because it adjusts for those company specific drivers rather than assuming all firms deserve the same multiple. With PVH’s actual P/E of 8.23x sitting well below the Fair Ratio of 18.89x, the shares screen as undervalued on this metric.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1417 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your PVH Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your own story about a company that ties your view of its future revenue, earnings and margins to a fair value estimate. On Simply Wall St, Narratives live on the Community page and let you plug in your assumptions, see how they flow through a forecast, then compare your Fair Value to the current share price so you can decide if PVH looks attractive, expensive or somewhere in between. Because Narratives update when new information like earnings or news is added, your view stays current without you rebuilding spreadsheets each time something changes. For PVH, one investor might set a relatively high fair value because they focus on brand strength and digital retail efforts, while another might land on a lower fair value if they are more cautious about competition from newer labels.

Do you think there's more to the story for PVH? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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