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What to Expect from VF Corporation’s Third-Quarter EPS

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Jan. 15 2019, Published 8:09 a.m. ET

EPS projections

VF Corporation (VFC) is scheduled to report its results for the third quarter of fiscal 2019 on January 18. Analysts expect the adjusted EPS to be $1.10 in the third quarter. VF Corporation hasn’t given an EPS outlook for the third quarter.

Higher revenues and a lower tax rate could cushion VF Corporation’s bottom-line performance. Share repurchases could also offer some upside. However, the company didn’t purchase any stock in the first two quarters of fiscal 2019. As of September 30, VF Corporation had $4 billion under its existing share buyback authorization.

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Analysts expect Hanesbrands (HBI) to deliver an 11.5% year-over-year decline in its fourth-quarter adjusted EPS to $0.46. For the fourth quarter, analysts expect Under Armour’s (UAA) adjusted EPS to be $0.04, which is better than the breakeven earnings reported in the same quarter the previous year.

Fiscal 2019 outlook

Due to ongoing strategic efforts and strong second-quarter numbers, management raised the bottom-line expectations. For fiscal 2019, the adjusted EPS is expected to be $3.65—compared to the earlier range of $3.52–$3.57. The expected tax rate for fiscal 2019 is 16.0%.

The adjusted gross margin is forecast to be 51.0%, while the adjusted operating margin is projected to expand by 80 basis points to 13.5%.

The cash flow from operations is expected to be $1.8 billion, which is $100 million more than the previous estimate. The capital expenditure for fiscal 2019 is estimated to be $275 million.

Past performance

In the second quarter, VF Corporation’s adjusted EPS was $1.43—compared to analysts’ estimate of $1.33. The top-line growth offset the negative impact from a 15.0% YoY rise in total costs and operating expenses. On a reported basis, the gross and operating margin fell by ten basis points to 50.1% and 16.9%, respectively.

On an adjusted basis (not including acquisitions), the gross margin expanded by 70 basis points to 50.9%, while the adjusted operating margin expanded by 100 basis points to 18.1%.

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