VF Corp. Earnings: Profit TOPS Analyst Estimate

Rising costs hurt S&P 500 (NYSE:SPY) component VF Corporation (NYSE:VFC) in the second quarter as profit dropped from a year earlier. V.F. is an apparel company that designs and manufactures or sources from independent contractors a variety of apparel and footwear for all ages.

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VF Corporation Earnings Cheat Sheet

Results: Net income for the textile-apparel fell to $123 million ($1.40 per share) vs. $129.4 million ($1.17 per share) a year earlier. This is a decline of 4.9% from the year-earlier quarter.

Revenue: Rose 14.1% to $2.1 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: VF Corporation beat the mean analyst estimate of 94 cents per share. It fell short of the average revenue estimate of $2.18 billion.

Quoting Management: “We’ve reached the halfway mark of the year, and are right on track to deliver another year of strong and very profitable growth to our shareholders,” said Eric Wiseman, VF Corporation Chairman and Chief Executive Officer. “The strength of VF’s business model – a diverse portfolio strategy supported by an intense focus on financial and operational disciplines – provides us with a clear competitive advantage as we successfully navigate through an increasingly uncertain economic environment.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 24%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 36.9% from the year earlier quarter.

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the first quarter, net income rose 7.2% from the year earlier, while the figure increased more than fourfold in the fourth quarter of the last fiscal year, 23.9% in the third quarter of the last fiscal year and 16.7% in the second quarter of the last fiscal year.

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell one percentage point from the year-earlier quarter to 45%. Over that time, margins have contracted on average 1.3 percentage points per quarter on a year-over-year basis.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 6 cents in the first quarter, by 2 cents in the fourth quarter of the last fiscal year, and by 32 cents in the third quarter of the last fiscal year.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the third quarter has moved up from $3.55 a share to $3.57 over the last ninety days. The average estimate for the fiscal year is $9.48 per share, a rise from $9.39 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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