The Zacks Analyst Blog Highlights:DSW, PVH, Warnaco Group, Hanesbrands and Ralph Lauren

CHICAGO, Jan. 29, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include DSW Inc. (NYSE: DSW), PVH Corp. (NYSE: PVH), Warnaco Group, Inc. (NYSE: WRC), Hanesbrands Inc. (NYSE: HBI) and Ralph Lauren Corporation (NYSE: RL).

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Here are highlights from Monday's Analyst Blog:

DSW Upgraded to Strong Buy

On Jan 25, 2013, Zacks Investment Research upgraded DSW Inc. (NYSE: DSW) to a Zacks Rank #1 (Strong Buy). The company has amassed a solid return of roughly 45.5% over the past one year.

Why the Upgrade?

DSW has been witnessing rising earnings estimates on the back of robust third-quarter fiscal 2012 results and a sturdy outlook for fiscal 2012. Moreover, this leading footwear and accessories retailer has outperformed the Zacks Consensus Estimate in 7 straight quarters by an average of 11.9%.

The company declared impressive third-quarter results on Nov 20, 2012, wherein earnings of $1.02 per share surpassed the Zacks Consensus Estimate of 89 cents by 14.6% and increased 15.9% from 88 cents earned in the prior-year quarter buoyed by top-line growth. Net sales rose 11.7% year over year to $592.7 million, and came ahead of the Zacks Consensus Estimate of $588 million. Comparable sales climbed 6.3%.

Robust top-line performance, healthy operating margin, rational store expansion strategy, strong financial position and a solid fiscal 2012 guidance justify the stock's Zacks Rank.

Based on its strong fundamentals, management anticipates fiscal 2012 earnings between $3.30 and $3.40 per share.

The Zacks Consensus Estimate for fiscal 2012 rose 2.1% to $3.38 per share over the last 90 days, and has a close proximity with the upper end of the company's guidance range. For fiscal 2013, the Zacks Consensus Estimate advanced 2.1% over the same timeframe to $3.87 per share.

PVH Hits New 52-Week High

Shares of PVH Corp. (NYSE: PVH) – the world's largest shirt and neckwear company – reached a new 52-week high of $121.26 on Friday, Jan 25, beating its previous 52-week high of $119.62. The closing share price of the company on Jan 28, 2013 stood at $120.86, representing a solid return of approximately 69.9% since Jan 3, 2012. Average volume of shares traded over the last 3 months came in at approximately 1,058,470.

Growth Drivers

An impressive record of beating the quarterly earnings expectations, a positive fiscal 2012 outlook and expanding business through acquisition mainly drove the upside in the shares of PVH Corp.

PVH reported an outstanding bottom-line performance in the third quarter of fiscal 2012, driven by solid improvement in margins along with a lower tax rate. The company's adjusted earnings per share jumped approximately 24% year over year to $2.34, beating the Zacks Consensus Estimate of $2.29.

However, the company's total revenue inched down 1% on a year-over-year basis to $1.643 in the year-ago quarter. The year-over-year revenue growth at the company's Tommy Hilfiger and Calvin Klein segments were more than offset by the decline at its Heritage Brands segment and unfavorable foreign currency exchange rates. However, quarterly revenue surpassed the Zacks Consensus Estimate of $1.638 billion.

Bolstered by continued growth momentum at Tommy Hilfiger and Calvin Klein brands, the company raised its fiscal 2012 earnings guidance range to $6.37–$6.38 per share, up from previous guidance range of $6.32–$6.37. The current Zacks Consensus Estimate for the fiscal is pegged at $6.39 per share, which is above the company's guidance range. Moreover, PVH Corp. expects net sales to increase 2% from the fiscal 2011 level.

Further, we believe that the acquisition of Warnaco Group, Inc. (NYSE: WRC) will facilitate the company to have operations at every major consumer market in the world, which will ultimately boost its top line. It is expected that the acquisition will increase the company's 2013 earnings by 35 cents per share.

Valuation Stretched, Yet Lucrative

PVH Corp. currently trades at a forward P/E of 18.92x, reflecting a 38.8% premium to the peer group average of 13.63x. Its price-to-sales ratio of 1.48 is also at a premium to the peer group average of 1.37. Given the company's compelling fundamentals, the premium valuation is justified and well supported by its long-term estimated EPS growth rate of 14.5% versus 12.8% for the peer group. The company has a market cap of approximately $8.54 billion.

Other Stocks to Consider

Apart from PVH Corp., other stocks' share prices in the industry that are gaining momentum include Hanesbrands Inc. (NYSE: HBI) and Ralph Lauren Corporation (NYSE: RL). Hanesbrands and Ralph Lauren's share prices rose approximately 15.4% and 6.1%, respectively, since both the company's reported better-than-expected bottom-line performance. All of these companies carry a Zacks Rank #2 (Buy).

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