VFC VF Corporation

V.F. Corporation (VFC) is scheduled to release its first-quarter 2011 results on Friday, April 29, 2011.

The Zacks Consensus Estimate for the quarter is pegged at $1.60 per share, representing an estimated year-over-year growth rate of 9.6%.  

Fourth Quarter Performance

V.F. Corporation reported fourth quarter 2010 adjusted earnings of $1.78 per share, striding ahead of the Zacks Consensus Estimate by 13 cents. The result also surpassed the $1.62 earned in the prior-year quarter by almost 10%.

Adjusted earnings were $196.1 million, 8% higher than $181.3 million in the fourth quarter 2009.

The company reported revenues of $2.1 billion in the fourth quarter, marginally exceeding the Zacks Consensus Estimate of $2.0 billion. Revenues eclipsed the year-ago figure by 11%. On a constant currency basis, revenues increased 12% year over year.

Agreement of Analysts

Over the past 30 days, two of 17 analysts covering V.F. Corporation for the first quarter of 2011 have revised their earnings estimates upward. There has been no movement in the opposite direction. In the last 7 days, one analyst has increased its estimate on the stock.

A similar trend has been noticed for fiscal 2011 in the last 30 days. Two of 18 analysts have revised their estimates upward over the last 30 days with none moving in the opposite direction. In the last 7 days, one of 18 analysts has revised the estimate upward.

Magnitude of Estimate Revisions

As a result of earnings revisions by analysts in the last 30 days, the Zacks Consensus Estimates for the first quarter and fiscal 2011 have moved up by 1 cent each to $1.60 and $7.09, respectively. In the last 7 days, the Zacks Consensus Estimates for those periods have remained static.

Surprise History

With respect to earnings surprises, V.F. Corporation showed a favorable trend in the last four quarters. The company has recorded positive surprises in the trailing four quarters with a low of 5.2% and a high of 29.9%. On an average, the earnings surprise was a positive 17.5%. Based on the current flow, we expect the company to come up with healthy results in the upcoming quarter.

Our Recommendation

V.F. Corp.'s diversified brand portfolio positions the company well above its peers and generates above-average industry growth, a fact that is surely to see them through in the current challenging environment.

Moreover, the company’s approach to brand management allows each brand to develop further, through rigorous marketing strategies, financial control, and operating leverage. Furthermore, given the strength of many of its brands and opportunities with regard to distribution, the company is set for significant long-term growth.

A big plus for V.F. Corp. is its benefit of an extremely diversified and balanced base of over 1,500 contractors across 60 countries controlled from one of the biggest sourcing offices in Hong Kong, which provide tremendous scale and expertise. Given the strength of V.F. Corp.’s global supply chain, the company can rapidly adjust its sourcing strategies.

V.F. Corp. holds a Zacks #3 Rank, which translates into a short-term 'Hold' recommendation. Our long-term recommendation on the stock is Neutral. The company has the wherewithal to negotiate intense competition from other well-established players in the apparel industry, such as Polo Ralph Lauren Corp. (RL) and Sears Holdings Corporation (SHLD).

 
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