NEW DIRECTIONAL PUT PLAYS
PVH Corp. - PVH - close: 103.24 change: -0.79
Stop Loss: 105.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.2 million
Entry on April -- at $---.--
Listed on April 28, 2015
Time Frame: Exit PRIOR to June option expiration
New Positions: Yes, see below
Why We Like It:
Investors have been relatively forgiving when it comes to corporations blaming the strong dollar on poor results. They were not so forgiving with PVH after the company significantly reduced their guidance.
PVH is in the consumer goods sector. According to the company, "PVH Corp., one of the world's largest apparel companies, owns and markets the iconic Calvin Klein and Tommy Hilfiger brands worldwide. It is the world's largest shirt and neckwear company and markets a variety of goods under its own brands, Van Heusen, Calvin Klein, Tommy Hilfiger, IZOD, ARROW, Warner's and Olga, and its licensed brands, including Speedo, Geoffrey Beene, Kenneth Cole New York, Kenneth Cole Reaction, MICHAEL Michael Kors, Sean John, Chaps, Donald J. Trump Signature Collection, DKNY, Ike Behar and John Varvatos."
PVH's earnings history has been mixed. They have managed to beat estimates the last four quarters in a row. Yet in three out of the last four quarters they have guided lower.
Their most recent report was March 25th. Analysts were expecting Q4 results of $1.73 a share on revenues of $2.1 billion. PVH delivered $1.76 but revenues were only up +0.8% to $2.07 billion. If you back out the currency headwinds then revenues would have been about +5%.
Management said it has been a highly challenging market environment and noted the strong dollar was a significant headwind.
The company lowered their guidance on both the Q1 2016 and for their fiscal year 2016. PVH expects Q1 earnings in the $1.35-1.40 range versus Wall Street's consensus at $1.52. For the whole year PVH is forecasting $6.75-6.90 in earnings per share compared to analysts' estimates at $7.38.
The stock's oversold bounce from its March lows has failed at resistance. We just saw the most recent oversold bounce, on April 23rd, quickly fail at short-term resistance. Longer-term shares appear to have topped out as well.
Tonight we are suggesting a trigger to buy puts at $102.65. More conservative traders may want to wait for a decline below $102.00 as an alternative entry point to buy puts.
Trigger @ $102.65
- Suggested Positions -
Buy the JUN $100 PUT (PVH150619P100) current ask $3.20
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike