Ralph Lauren Corp (RL), VF Corp (VFC), PVH Corp (PVH): Are These Clothiers ‘The Emperor’s New Clothes?’

Calvin Klein, Van Heusen, etc.

PVH Corp (NYSE:PVH) provides its products to the top department stores, including J.C. Penney Company, Inc. (NYSE:JCP), Kohl’s Corporation (NYSE:KSS), Dillard’s, Inc. (NYSE:DDS) and Macy’s, Inc. (NYSE:M). PVH Corp (NYSE:PVH) also has some 700 outlet stores under the brand names Van Heusen, IZOD, Bass, and Calvin Klein.

Of course, the big news for PVH Corp (NYSE:PVH) of late has been the acquisition of The Warnaco Group, which previously licensed the Calvin Klein jeans wear and underwear businesses. The acquisition brings the Calvin Klein brand under one roof.

Analysts expect revenue to grow to over $8 billion in fiscal 2014, thanks to an over $2 billion addition from the Warnaco businesses. PVH Corp (NYSE:PVH) has managed to beat EPS estimates in each of the last four quarters, including its 40% beat last quarter. Analysts expect EPS to grow 10% year over year next quarter.

What’s a fool to do?

As the market rebounds, there’s no better way to play the increase in consumer spending than on clothes. PVH Corp (NYSE:PVH) is trading below the other major clothiers on a price to sales basis.

But PVH has one of the most levered balance sheets, with the highest debt-to-equity ratio.

But this was in part due to the company’s acquisition of The Warnaco Group earlier this year. PVH is now expected to grow EPS at an annualized 12.1% over the next five years, better than either Ralph Lauren or VF, which are expected to grow EPS at 11% and 10.8%, respectively. You couple PVH’s top growth rate and cheap valuation, and it appears to be the best bet in the industry with a PEG ratio of 1.5, compared to Ralph Lauren’s 1.98 and VF’s 1.7.

The article Are These Clothiers ‘The Emperor’s New Clothes?’ originally appeared on Fool.com and is written by Marshall Hargrave.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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