We expect the footwear and apparel retailer V.F. Corporation (VFC) to beat expectations when it reports third-quarter 2014 results before the market opens on Oct 20.
Why a Likely Positive Surprise?
Our proven model shows that V. F. Corp. may beat earnings because it has the right combination of two key components.
Positive Zacks ESP: V. F. Corp. currently has an Earnings ESP of +0.92%. This is because the Most Accurate estimate stands at $1.10 per share, while the Zacks Consensus Estimate is pegged at $1.09.
Zacks Rank #2 (Buy): Note that stocks with a Zacks Rank #1, 2 and 3 have a higher chance of beating earnings. The Sell rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of V. F. Corp.'s Zacks Rank #2 and Earnings ESP of +0.92% makes us confident of a positive earnings beat.
What is Driving Better-than-Expected Earnings?
V.F. Corporation’s diversified brand portfolio and approach toward brand management allows each of its brands to develop further through rigorous marketing strategies, financial control and operating leverage. We believe that, given the strength of many of its brands and opportunities with regard to distribution, the company is poised for long-term growth. The company also looks lucrative because of its ongoing initiatives of capitalizing on opportunities in the emerging markets and its focus on core business activities. The company’s growth prospects look promising, given its sustained focus on opportunistic acquisitions and expansion of its global operations, which will boost its top and bottom lines.
Further, following the strong second-quarter 2014 results the company seems confident about the rest of 2014, mainly on the back of its strong brand portfolio. For the third quarter, the company expects revenue growth to be similar to that of second-quarter, driven by continued strength at the Outdoor & Action Sports, international and Direct-to-Consumer businesses.
For 2014, it continues to expect an 8% increase in revenues, considering favorable growth in all its coalitions. Adjusted earnings for 2014 are still expected to rise 13% year over year to $3.06 per share.
V.F. Corp. has topped the Zacks Consensus Estimate in three of the trailing four quarters with an average positive surprise of 2.4%. In the last concluded quarter, the company outdid the Zacks Consensus Estimate by 2.9%.
Other Stocks to Consider
V. F. Corp. is not the only firm looking up this earnings season. The following companies are also likely to beat earnings in the to-be-reported quarter:
The New York Times Company (NYT) with an Earnings ESP of +100% holds a Zacks Rank #2.
Under Armour, Inc. (UA) has an Earnings ESP of +2.50% and a Zacks Rank #2.
The Clorox Company (CLX) has an Earnings ESP of +1.94% and a Zacks Rank #3 (Hold).
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