Analysts Highlight V.F. Corp's Margin Gains And Sales Momentum, Remain Cautious On Valuation Potential

V.F. Corporation VFC shares are trading higher on Tuesday.

The parent company of Vans and The North Face reported second-quarter revenue of $2.8 billion, beating the consensus estimate of $2.7 billion, according to Benzinga Pro. The company reported second-quarter earnings of 60 cents per share, beating analyst estimates of 37 cents per share.

BMO Capital Markets analyst Simeon Siegel reiterated the Market Perform rating, with a price forecast of $14.

The analyst acknowledged the initial signs of progress and anticipated continued strength from the gross margins but expressed a preference to stay on the sidelines, considering that this is already reflected in the current share prices.

According to Benzinga Pro, VFC stock has gained over 22% in the past year. Investors can gain exposure to the stock via Invesco S&P SmallCap Consumer Discretionary ETF PSCD.

Also Read: VF Corp Q2 Earnings: Revenue Beat, EPS Beat, Cost Reductions On Track, Guidance And More

Momentum in Greater China persisted, though ongoing challenges in the Americas countered it. Siegel added that the North Face (TNF) is expected to experience significantly easier comparisons across regions. The analyst raised FY25 adjusted EPS estimates to $0.39 from $0.35.

Goldman Sachs analyst Brooke Roach maintained a Neutral rating on the stock, with a price forecast of $20.

The analyst expressed optimism about the quarter, citing improved profitability and a sequential rebound in sales momentum. Roach noted that gross margins outperformed expectations due to effective product costing and full-price sales, with inventories decreasing by 13% year over year.

However, the guidance for third-quarter operating profit is below consensus, projected at $175-200 million compared to FactSet’s expectation of $256 million.

Additionally, the lack of clear visibility into sustained profitable growth for key brands limits the potential for valuation expansion until a clear path to profit improvement is established, Roach writes.

The company will conduct its investor day tomorrow, Wednesday, October 30th.

Price Action: VFC shares are trading higher by 22% to $20.78 at last check Tuesday.

Photo via Shutterstock

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