Phillips-Van Heusen (PVH): Eclectic couture

They say that politics makes for strange bedfellows. So does retailing. For example, there is a New York outfit with subsidiaries that include the largest selling shoe maker in America, a well-known creator of trendy fashions, an equally well known maker of sports knits and the number one dress shirt producer in the world.

Phillips-Van Heusen (NYSE: PVH) markets clothes, sunglasses and shoes for men, women and children under its Van Heusen, Bass, Calvin Klein and IZOD brands. It also sells items under licensed names and private labels. Products are distributed to wholesale clients and through the firm's own outlet stores, which operate under the names of its various brands. Customers include Kohl's (NYSE: KSS) and JCPenney (NYSE: JCP).

The company pleased investors late last month, when it announced Q2 EPS of 70 cents and revenues of $552.4 million. Analysts had been looking for 62 cents and $540.6 million. The CEO noted that all PVH businesses experienced revenue and earnings growth, despite recent challenges in the overall retail environment. Management also guided Q3 EPS to $1.02-$1.03 ($1.02 consensus), Q3 revenues to $705 million ($652.29M consensus), FY08 EPS to $3.15-$3.17 ($3.10 consensus) and FY08 revenues to $2.44 billion ($2.42B consensus). Lehman Brothers and Wedbush Morgan subsequently reiterated "buy" ratings on the issue and declared price targets in the $69-$70 range.

PVH shares popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Altogether, brokers recommend the issue with three "strong buys," eight "buys" and one "hold." Analysts see a 19% growth rate through the next year. The PVH P/E ratio (18.28), PEG ratio (1.07), Price to Sales ratio (1.34), Price to Book ratio (2.89), Sales Growth rate (20.37%) and EPS Growth rate (32.08%) compare favorably with industry, sector and S&P 500 averages.

Institutions hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past twelve months, it has traded between $38.20 and $62.19. A stop-loss of $45.95 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.