Nucor earnings beat by $0.08, revenue fell short of estimates
Thursday, VF Corp (NYSE:VFC) saw its price target increased by Telsey Advisory Group from $21 to $27, while the firm kept a Market Perform rating on the stock. According to InvestingPro data, six analysts have recently revised their earnings upwards for the upcoming period, and the stock has delivered impressive returns of over 50% in the past year. Telsey highlighted VF Corp’s strong fiscal third-quarter performance, which surpassed expectations, marking a return to positive sales growth for the first time since the first quarter of fiscal 2023. The company’s gross margin saw a larger expansion than anticipated, and VF Corp was commended for its effective cost management.
The analyst noted particular strength in the Outdoor segment, which grew by 7%, although the Active segment still faced challenges, dropping by 6%. The North Face brand experienced a 5% year-over-year sales increase, attributed to broad-based strength and robust holiday sales. Conversely, Vans’ revenue fell by 9%, despite new products performing well. Despite these mixed results, InvestingPro analysis shows VF Corp has maintained dividend payments for 55 consecutive years, demonstrating long-term financial stability. VF Corp’s gross margin exceeded forecasts in the third quarter, thanks to reduced product costs and fewer promotions, while operating expenses were significantly lower than expected.
VF Corp remains on target to achieve the initial $300 million in savings from its Reinvent program, having realized $55 million this quarter. The company is also advancing towards the next phase of net SG&A savings, estimated to be between $250 million and $300 million, which was discussed at its Investor Day in October. VF Corp has also improved visibility by continuing the practice of providing guidance for the upcoming quarter.
While the revenue guidance for the fourth quarter indicates a potential return to negative growth, the forecast for operating income is more optimistic, aligning closely with consensus expectations at the midpoint. Telsey views the third-quarter results as indicative of sequential improvements and better execution. However, the firm is awaiting further details on brand-level plans during the upcoming Investor Day in March, as two of VF Corp’s four largest brands face significant challenges, with Vans and Dickies down 9% and 10%, respectively, in the third quarter.
The new price target of $27 is based on a 22.0x multiple on Telsey’s two-year forward EPS estimate of $1.23, which is compared to the current near-term multiple of 30.8x and the five-year average of 20.1x. Telsey’s updated valuation reflects the company’s improved execution and the positive developments seen in the latest quarter. InvestingPro analysis indicates the stock is currently trading below its Fair Value, with additional metrics and insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of VF Corp among 1,400+ US equities.
In other recent news, VF Corp has been the subject of multiple analyst upgrades. Citi analysts, led by Paul Lejuez, raised the stock price target to $30, maintaining their Buy rating, while Stifel analysts increased their target to $35, also maintaining a Buy rating. These adjustments follow VF Corp’s third-quarter results, which exceeded expectations with adjusted earnings per share of $0.62, surpassing the analyst estimate of $0.33, and revenue for the quarter reaching $2.83 billion, beating the consensus estimate of $2.75 billion.
Despite a less optimistic revenue guidance for the fourth quarter, both Citi and Stifel analysts predict potential opportunities for the company. VF Corp also raised its full-year free cash flow guidance to $440 million, up from a previous forecast of $425 million. However, the company anticipates a decline in revenue of 4% to 6% year-over-year for the fourth quarter.
In addition, VF Corp’s Board of Directors declared a quarterly dividend of $0.09 per share. These recent developments provide valuable insights for investors keeping an eye on VF Corp’s performance and future prospects.
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