uploads///vfc pm

How Did VF Corporation’s 2Q16 Earnings Turn Out?

By

Updated

Price movement

VF Corporation (VFC) has a market cap of $26.3 billion. It fell by 1.3% to close at $62.37 per share on July 22, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -2.6%, -3.3%, and 1.4%, respectively, on the same day. VFC is trading 0.63% below its 20-day moving average, 0.18% above its 50-day moving average, and 0.90% below its 200-day moving average.

Article continues below advertisement

Related ETF and peers

The iShares Edge MSCI USA Quality Factor ETF (QUAL) invests 0.33% of its holdings in VF Corporation. The ETF tracks an index of US large and mid-cap stocks, selected and weighted for a high ROE (return on equity), stable earnings growth and a low debt-to-equity ratio compared with peers in each sector. The YTD price movement of QUAL was 5.7% on July 22.

The market caps of VF Corporation’s competitors are as follows:

  • Gap (GPS): $9.7 billion
  • Ralph Lauren (RL): $8.2 billion
  • Columbia Sportswear (COLM): $4.2 billion

Performance of VF Corporation in fiscal 2Q16

VF Corporation reported fiscal 2Q16 total revenues of $2.45 billion, a rise of 0.75% over the total revenues of $2.43 million in fiscal 2Q15. Revenues of the Outdoor & Action sports, Jeanswear, and Imagewear segments rose by 1.7%, 3.5%, and 2.6%, respectively, and the revenue of the Sportswear segment fell by 19.2% between fiscals 2Q15 and 2Q16. The company’s operating income fell by 3.5%. Its net income and EPS (earnings per share) fell to $51.0 million and $0.12, respectively, in fiscal 2Q16, compared with $170.8 million and $0.40, respectively, in fiscal 2Q15.

VFC’s cash and cash equivalents fell by 28.4%, and its inventories rose by 14.2% between fiscals 4Q15 and 2Q16. In 2Q16, its current ratio fell to 1.5x and its debt-to-equity ratio rose to 1.1x, compared with 2.1x and 0.79x, respectively, in fiscal 4Q15.

Article continues below advertisement

Quarterly dividend

VF Corporation has declared a quarterly dividend of $0.37 per share on its common stock. The dividend will be paid on September 19, 2016, to shareholders of record on September 9, 2016.

Projection

The company has made the following projections for fiscal 2016:

  • revenue to increase in the range of 3%–4%
  • gross margin expected to improve by ~0.50% to 48.7%, which includes ~0.70% of headwind from changes in foreign currency
  • operating margin of 14.5%, which includes ~0.60% from the negative impact of changes in foreign currency
  • reported EPS growth of 5% to $3.20
  • effective tax rate of ~21%
  • cash flow from operations of $1.3 billion

In the next part of this series, we’ll take a look at Gentex.

Advertisement

More From Market Realist