June 21, 2022

What You Need to Know Ahead of VF Corp’s (VFC) Fourth Quarter Results – May 16, 2022

V.F. Corporation (VFC Free Report) is expected to release fourth quarter fiscal 2022 results on May 19, after market close. The lifestyle apparel designer is expected to have posted growth in profits and sales in the quarter ahead.

Zacks’ consensus estimate for fiscal fourth-quarter earnings is pegged at 46 cents per share, suggesting substantial growth of 70.4% from the 27 cents reported in the year-ago quarter. Earnings estimates have remained unchanged over the past 30 days. The revenue consensus mark is pegged at $2.83 billion, indicating 9.6% growth over the year-ago quarter.

Zacks’ consensus estimate for the company’s fiscal 2022 earnings is pegged at $3.20, indicating growth of 144.3% from the reported figure for the prior year quarter. Meanwhile, the revenue consensus mark is pegged at $11.85 billion, suggesting a 28.2% increase over the reported figure for the prior year quarter.

The company posted a surprise profit of 11.6% in the last reported quarter. Additionally, its earnings have exceeded Zacks’ consensus estimate by 35.5%, on average, over the past four quarters.

Key Factors to Note

VF Corp enjoyed widespread momentum across the company’s brands. Additionally, the strength of the North Face brand, as well as a contribution from the Supreme brand thanks to Supreme’s strong subscriber base among the younger generation, bodes well. Growth in EMEA and North America, as well as the strength of its biggest brands, including The Vans, The North Face, Timberland and Dickies, should have helped fiscal fourth quarter sales.

The company remains on track with the transformation of the digital and hyper-digital business model, which has driven revenue in recent quarters. Online shopping, in-store pickup and curbside delivery options helped digital sales.

However, management continues to suffer from high transportation costs related to supply chain disruptions. Greater China’s lackluster performance due to retail traffic volatility resulting from pandemic-induced lockdowns also likely acted as a deterrent.

Management, on its last quarterly earnings call, expected travel restrictions and limited consumption to hurt results during the Chinese New Year holiday season. As a result, he forecast low single-digit growth for China in fiscal 2022. Revenue in fiscal 2022 in APAC is expected to grow 7-9%, down from 12 to 14% previously announced.

The company forecast revenue of $11.85 billion, suggesting 28% year-over-year growth. This view compares unfavorably to the previously mentioned $12 billion in revenue, indicating 30% year-over-year growth. International revenue is expected to grow 22-24%, down from the previously mentioned 24-26% growth. Regionally, revenue in EMEA is expected to grow 28-30%, down from previously reported 30-32% growth, and APAC is expected to grow 7-9%, down from growth of 12 to 14% previously announced. .

It forecast direct-to-consumer revenue growth of 32-34%, compared to the previously mentioned 34-36% increase. VFC also expected more than 15% growth in digital revenue, down from the previously announced 20% increase. The company forecast an adjusted gross margin of 55%, suggesting year-over-year growth of 170 basis points. This compares unfavorably to the previously mentioned 56% gross margin, implying 270 basis points year-over-year growth.

What the Zacks Model Reveals

Our proven model does not conclusively predict an earnings beatdown for VF Corp this season. The combination of a positive Earnings ESP and a Zacks rank of #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of beating Earnings. But it is not the case here. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

VF Corp has a Zacks rank of #4 (sell) and an ESP gain of 0.00%.

Stocks with a favorable combination

Here are a few companies you might want to consider, as our model shows they have the right combination of elements to perform better this season:

PVH Corp. (HPV Free Report) currently has a +2.32% Earnings ESP and Zacks Rank #3. PVH is expected to report revenue growth when it reports first quarter 2022 results. Zacks’ consensus estimate for quarterly revenue is set at $2.1 billion, indicating an improvement of 0 .1% compared to the figure indicated in the quarter of the previous year. You can see the full list of today’s Zacks #1 Rank stocks here.

However, the Zacks consensus estimate for PVH Corp’s net income was flat for the past 30 days at $1.58 per share. However, the estimate suggests a decline of 17.7% from the year-ago quarter. PVH has posted an 83.8% profit pace, on average, over the past four quarters.

lululemon athletic (LULU Free Report) has an Earnings ESP of +0.28% and a Zacks Rank of 3 at present. The company will likely see an increase in net income when it reports the first quarter of fiscal 2022. Zacks consensus estimate for quarterly earnings rose 2.1% to $1.43 per share during of the past 30 days, suggesting a 23.3% increase from the reported number in the prior year quarter.

Lululemon’s revenue is also expected to grow year over year. Zacks’ consensus estimate for quarterly revenue is pegged at $1.55 billion, suggesting a 26% increase over the figure reported in the year-ago quarter. LULU has recorded a profit pace of 0.3%, on average, over the past four quarters.

Vail Resorts (MTN Free Report) currently has an Earnings ESP of +1.00% and a Zacks Rank of 3. The company is expected to record an increase in earnings when it reports the third quarter of fiscal 2022. The consensus estimate Zacks for quarterly earnings rose 0.3. % over the past 30 days at $9.13 per share, suggesting growth of 35.9% from the figure reported a year ago.

Vail Resorts revenue is expected to grow year over year. Zacks’ consensus estimate for quarterly revenue is pegged at $1.15 billion, indicating a 29.7% increase from the figure reported in the year-ago quarter. MTN has recorded a profit pace of 1.7%, on average, over the past four quarters.

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