PVH Corp (PVH): This Apparel Giant Looks Quite Expensive Now

VF Corp (NYSE:VFC) also has a higher valuation than PVH. It is trading at $193.80 per share, with the total market cap of $21.2 billion. The market values VF Corp (NYSE:VFC) at around 12.8 times its trailing EBITDA. VF Corp has been growing its business by acquiring other apparel and footwear companies, then integrating those businesses into VF Corp for cost and operational synergies, driving overall business organic growth. Recently, the company announced its global growth strategy to 2017. VF Corp expects that it can deliver $17.3 billion in revenue and $18 earnings per share by 2017, with spectacular growth in the Outdoor & Action Sports, direct-to-consumer, and international business segments. The annual operating cash flow was estimated to come in at $2.4 billion. Consequently, the cumulative operating cash flow might reach $9.5 billion in the period of 2013-2017. With the expected strong potential growth, VF Corp targeted a dividend payout ratio of around 40%, reaching the annual total shareholder return of 15%.

My Foolish take

PVH Corp (NYSE:PVH) would continue to experience decent growth with the acquisition of Warnaco, delivering shareholders a good return in the long run. However, the valuation seems to be quite rich at its current trading price. The huge insider sale should make investors cautious before initiating a long position in this stock. Personally, I would rather wait for future price corrections before investing in the company.

The article This Apparel Giant Looks Quite Expensive Now originally appeared on Fool.com and is written by Anh Hoan.

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

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.