NEW YORK (TheStreet) -- TheStreet's Jim Cramer and Stephanie Link, co-managers of the Action Alerts PLUS portfolio, say Macy's (M) has a solid partnership with PVH (PVH), which has a 50% share of the tie market and 25% share of the shirt market.
Cramer calls PVH a restructuring story and notes the company has done a good job of integrating two of its major brands, Tommy Hilfiger and Calvin Klein.
Link points to increased upside in Europe but notes the PVH stock price does not reflect this. Cramer says PVH and V.F. (VFC) are long-term plays because they are worldwide clothiers. Link notes the stock has run up into the $130 range from the low $120 range. She is holding shares but is not adding to her position because she wants to remain price disciplined.
Separately, TheStreet Ratings team rates PVH CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate PVH CORP (PVH) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 15.4%. Since the same quarter one year prior, revenues rose by 25.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $357.94 million or 25.96% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 12.80%.
- The gross profit margin for PVH CORP is rather high; currently it is at 55.98%. Regardless of PVH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PVH's net profit margin of -1.82% significantly underperformed when compared to the industry average.
- PVH's debt-to-equity ratio of 0.92 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.88 is weak.
- PVH CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PVH CORP reported lower earnings of $1.71 versus $5.87 in the prior year. This year, the market expects an improvement in earnings ($7.50 versus $1.71).
- You can view the full analysis from the report here: PVH Ratings Report