VF Corp. Earnings Preview: Double-Digit EPS, Sales Growth Expected

VF Corp. VFC is scheduled to report fourth-quarter 2011 results tomorrow, February 16, before the markets open. The company has reported increasing profits for three straight quarters, but analysts have been bearish lately on this apparel maker, as indicated by the decreasing EPS estimate for the most recent quarter. Analysts are looking for the company to report that its per-share earnings rose 22.9% from a year ago to $2.31 for the quarter, as well as that revenue totaled $2.9 billion. That would be a year-over-year revenue increase of 36.1%. But note that the EPS estimate was $2.34 some 60 days ago. However, analysts have underestimated VF Corp.'s per-share earnings in the past eight quarters -- by more than 11% in each of the past three quarters. Looking back to the previous quarter, VF Corp. said its profit increased 24% from the year-ago period to $300.7 million, or $2.69 a share. Adjusted net income topped analyst expectations. Revenue rose 23% year over year to $2.8 billion, also beating estimates. The company attributed the strong third-quarter results to the diversity of its brand portfolio, including the recently acquired Timberland brand. For the full year, the consensus estimate calls for $8.18 per share earnings, an increase of 21.3% from the previous year. That EPS estimate was $8.20 just 60 days ago. And full-year revenues are expected to have risen 22.4% year over year to $9.4 billion. The Company Greensboro, N.C.-based VF Corporation engages in the design and manufacture of apparel, footwear and accessories primarily in the U.S. and Europe. Its brands include Wrangler, Lee, Vans, The North Face and Eastpak. The company sells its products to specialty stores, department stores, national chains and mass merchants. The company was founded in 1899 and now is an S&P 500 component with a market cap of $15.8 billion. Competitors include Levi's, Nike NKE, Polo Ralph Lauren RL and True Religion Apparel TRLG. Nike and Polo Ralph Lauren topped EPS and revenue estimates in their most recent quarters, but True Religion missed on both counts. See also: True Religion Down 25% After Company Misses Earnings Estimates During the three months that ended in December, VF Corp. was ranked as the fifth-best among Fortune 500 companies in 2011, and it boosted its quarterly dividend by 14.3%. The company also raised its full-year revenue and profit forecasts. Performance The company has a long-term earnings per share growth forecast of 14.0% and a return on equity of 16.3%. The operating margin is higher than the industry average, but so is the P/E ratio. VF Corp. has a dividend yield of 2.0%. Short interest is 2.4% of the float. Of 21 analysts surveyed who follow the stock, 12 rate it a Buy or Strong Buy. None recommend selling it. But their mean price target on the shares is only about 4% higher than the current share price. After trading mostly between $130 and $140 since October, shares reached a 52-week high of $143.67 yesterday. The share price is 69.3% higher than a year ago, and up 13.1% year to date, as well as above the 50-day and 200-day moving averages. The stock has outperformed Nike, Polo Ralph Lauren and True Religion Apparel, as well as the broader markets, over the past six months. See also: Top Dividend Stocks of 2011