Iconix Brand Group Inc (ICON), The Walt Disney Company (DIS): A “Fat” Brand To Help You Live Large

The second runner up

Well known Calvin Klein and Tommy Hilfiger lifestyle brands generate three quarters of PVH Corp (NYSE:PVH) revenues with heritage brands Izod, Bass, Van Heusen, Speedo, Arrow, and Warners taking up the slack.  In 2012 Tommy Hilfiger and Calvin Klein drove global retail sales of $6 billion and $7.6 billion respectively. Global licensing revenues of $180 million are expected for 2013 from Calvin Klein clients such as Coty and G-III.

Operating margin is only 11.79% mainly because PVH Corp (NYSE:PVH) is less an intellectual property brand manager than Iconix and actually operates more as a retailer and designer. However, its ten year CAGR rate of 16% for revenue and over 20% for EPS is solid.

2013 is expected to be an interim year for PVH Corp (NYSE:PVH) as it assimilates Calvin Klein jeanswear and underwear from its purchase of licensee Warnaco. PVH Corp (NYSE:PVH) is viewed as a very solid apparel company but its growth profile is not nearly as exciting as Iconix Brand Group Inc (NASDAQ:ICON)’ despite international expansion and sales growth of 33.60% in the latest quarter. Its PEG of 1.43 reflects the 11.90% five year EPS growth rate analysts expect.

The Foolish takeaway
Iconix has a unique business model. This small cap can be a promising addition to a portfolio with its fat margins and high CAGRs. The Walt Disney Company (NYSE:DIS) is a worthwhile long term addition to any portfolio but buy after a major box office flop on weakness. PVH Corp (NYSE:PVH) is integrating some powerful brands but its business model isn’t nearly as intriguing as Iconix.

The article A “Fat” Brand To Help You Live Large originally appeared on Fool.com and is written by AnnaLisa Kraft.

AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. 

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