Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message| ()  

In this article, I will feature one consumer stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

PVH Corp. (PVH) operates as an apparel company in the United States and internationally.


(Click to enlarge)

Insider selling during the last 30 days

Here is a table of PVH's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Francis Duane CEO, Wholesale Apparel Dec 11 16,250 No 41,250 shares + 22,450 options 20.3%
Emanuel Chirico Chairman, CEO Dec 12 500,000 No 104,817 shares 82.7%
Paul Murry President, Calvin Klein Dec 11 10,355 No 21,072 shares 32.9%

There have been 526,605 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of PVH's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
December 2013 526,605 0
November 2013 0 0
October 2013 98,286 0
September 2013 0 0
August 2013 49,144 0
July 2013 50,198 0
June 2013 346,025 0
May 2013 147,446 0
April 2013 56,863 0
March 2013 0 0
February 2013 0 0
January 2013 5,000 0

There have been 1,279,567 shares sold and there have been zero shares purchased by insiders this year. The month of December has seen the most insider selling.

Financials

PVH reported the third-quarter, which ended November 3, financial results on December 9 with the following highlights:

Revenue $2.3 billion
Net income $196.7 million
Cash $542.5 million
Debt $4.3 billion

Outlook

PVH's guidance is as follows:

Q4/2013 FY2013
Revenue (Non-GAAP) $2.08 billion $8.24 billion
Non-GAAP EPS $1.40 $7.00

Competition

PVH's competitors include The Jones Group (JNY), Perry Ellis International (PERY), and Ralph Lauren Corporation (RL). Here is a table comparing these companies.

Company PVH JNY PERY RL
Market Cap: 10.53B 1.07B 221.87M 15.83B
Employees: 11,800 6,250 2,600 14,000
Qtrly Rev Growth (yoy): 0.47 -0.01 -0.06 0.03
Revenue: 7.15B 3.85B 954.49M 7.06B
Gross Margin: 0.53 0.35 0.33 0.59
EBITDA: 1.13B 225.40M 48.92M 1.32B
Operating Margin: 0.12 0.04 0.04 0.15
Net Income: 207.00M -52.70M 9.85M 729.00M
EPS: 2.72 -0.72 0.65 7.85
P/E: 47.38 N/A 22.77 22.33
PEG (5 yr expected): 1.64 9.46 3.29 2.10
P/S: 1.46 0.27 0.23 2.21

PVH has the second-highest P/S ratio among these four companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
JNY 0 170,479
PERY 0 36,963
RL 0 362,820

Only PVH has seen intensive insider selling during the last 30 days.

Conclusion

There have been three different insiders selling PVH and there have not been any insiders buying PVH during the last 30 days. All three of these insiders decreased their holdings by more than 10%. PVH has an insider ownership of 0.60%.

PVH is trading at a P/E ratio of 47.38 and a forward P/E ratio of 15.86. The company has a book value of $49.77 per share and the stock has a dividend yield of 0.12%. Before entering short PVH, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/E ratio and the intensive insider-selling activity.

Source: Phillips-Van Heusen: 3 Different Insiders Have Sold Shares This Month