VF Corporation - Growth & Income
May 03 2012 - 8:00PM
Zacks
VF Corporation (VFC) continues to deliver impressive
results, and that is driving both earnings estimates and the stock
price higher.
The company recently delivered its 10th consecutive
positive earnings surprise on strong organic revenue growth. It is
a Zacks #2 Rank (Buy).
While VF Corporation is expected to grow earnings
per share at a double-digit pace over the next couple of years, the
company also pays a dividend that yields a solid 1.9%.
Company Description
VF Corporation is a branded lifestyle apparel
company with over 30 brands. Its top six brands are The North
Face, Wrangler, Timberland, Vans, Lee and Nautica.
The company is headquartered in Greensboro, North
Carolina and has a market cap of $17.1 billion.
First Quarter Results
VF Corporation delivered impressive first quarter
results on April 27. Earnings per share came in at $1.94, beating
the Zacks Consensus Estimate of $1.88. This was a 7% increase over
the same quarter last year.
Revenue jumped 31% to $2.556 billion, ahead of the
Zacks Consensus Estimate of $2.449 billion. This was aided in part
by the Timerberland acquisition, but organic growth was still a
remarkable 12%.
International revenues remained hot, with organic
growth up 13% in Europe and 19% in Asia. Sales from overseas
accounted for 40% of total revenue.
The gross profit margin did contract as expected,
from 47.2% to 45.7% due to higher jeanswear product costs. But the
operating margin still expanded, from 12.3% to 12.5%.
Estimates Rising
Following solid Q1 results, management raised its
earnings guidance for the remainder of the year. The company now
expects to earn around $9.45 per share on revenue growth of 15%, up
from previous guidance of $9.30.
This prompted analysts to continue revising their
estimates higher, sending the stock to a Zacks #2 Rank (Buy). As
you can see below, consensus estimates have been steadily rising
over the last several months as VF Corporation has delivered 10
consecutive positive earnings surprises:
![: Price & Consensus Chart :](http://www.zacks.com/images/upload_dir/1336064739.jpg)
The Zacks Consensus Estimate for 2012 is now $9.48,
slightly above guidance, and representing 18% growth over 2011 EPS.
The 2013 consensus estimate is currently $10.91, corresponding with
15% growth.
Solid Dividend
Although most people will focus on the rapid growth
at VF Corporation, don't overlook the company's solid 1.9%
yield.
Since the year 2000, the company has increased its
dividend at a compound annual rate of 10%.
Valuation
Shares of VFC have soared 55% since I first wrote
about it on April 18 of last year. But the valuation picture still
looks reasonable.
Shares trade at 15.7x 12-month forward earnings, a
discount to the industry median of 17.4x. Its price to sales ratio
of 1.8 is in-line with its peers.
The Bottom Line
With rising estimates, strong growth, a solid 1.9%
yield and reasonable valuation, VF Corporation still offers a lot
to like.
Read the October 28 article here.
This Week's Growth & Income Zacks Rank Buy
Stocks:
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yields an attractive 3.1%. Read the full article.
IDEX Corporation (IEX) recently delivered a
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IDEX recently increased its dividend by 18%. It currently yields
1.8%. Read the full article.
Diebold, Incorporated (DBD) recently
delivered record quarterly earnings for the first quarter of 2012
on strong revenue growth. Management raised its guidance off the
strong quarter, prompting analysts to revise their estimates
higher. It is a Zacks #1 Rank (Strong Buy) stock. The company also
continues to steadily increase its dividend. It currently yields a
solid 2.9%. Read the full article.
Wyndham Worldwide Corporation (WYN)
continues to deliver impressive results. The company recently
reported another strong positive earnings surprise on
better-than-expected revenue. And management raised its earnings
guidance for the remainder of the year, prompting analysts to
revise their estimates higher. This sent the stock to a Zacks #1
Rank (Strong Buy). In addition, Wyndham has been buying back its
stock and recently hiked its dividend by 53%. It yields a solid
1.8%. Read the full article.
Todd Bunton is the Growth & Income Stock
Strategist for Zacks Investment Research and Editor of the Income
Plus Investor service.
V F CORP (VFC): Free Stock Analysis Report
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