Why VFC surged
On January 18, VF Corporation (VFC) stock surged 12.4% after it reported its results for the third quarter of fiscal 2019. The company beat analysts’ revenue and adjusted EPS projections and delivered strong YoY (year-over-year) growth. It also raised its guidance for fiscal 2019.
As of January 18, the stock had risen 15.4% YTD (year-to-date), and it closed the day at $82.34. The stock fell 3.6% in 2018. Hanesbrands (HBI), Under Armour (UAA), Capri Holdings (CPRI), and PVH Corp. (PVH) have risen 18.4%, 16.0%, 11.9%, and 18.5% YTD, respectively, as of January 18.
Changes to fiscal 2019 guidance
VF Corporation now expects its net revenue to be at least $13.80 billion in fiscal 2019 compared to the $13.70 billion it projected earlier. In fiscal 2019, it expects its EPS to be $3.73 compared to its previous estimate of $3.65. This revenue guidance includes the impact of $45 million worth of additional investments.
The company’s jeans business remains troubled, prompting it to cut its outlook. For fiscal 2019, the company now expects the jeans business to see a revenue fall of 3%. Earlier, VFC had expected the business’s revenue to fall 1%–2% on a YoY basis.
Higher demand for athleisure wear and private denim brands has negatively affected the company’s jeans business, and Sears Holdings’ bankruptcy has added to its woes.
VF Corporation recently announced that it would spin off its Wrangler, Lee, and VF Outlet businesses into a new company. VFC is confident that it will complete the spin-off by April 2019.
Changes to PE ratio
On January 18, VF Corporation’s 12-month forward PE ratio was 20.1x. Its PE multiple has increased 13.5% since it announced its fiscal 2019 third-quarter earnings results.
Hanesbrands, PVH Corp., Capri Holdings, Ralph Lauren (RL), and Under Armour have PE ratios of 8.3x, 10.7x, 8.5x, 15.4x, and 62.3x, respectively.