) touched a new 52-week high of $63.99 on Tuesday, May 13, 2014 and
eventually closed trade at $63.54. The stock has been gaining
momentum since reporting upbeat earnings results for the first
quarter of 2014 last month. Moreover, this global apparel retailer
has amassed a year-over-year return of 37.6%. Average volume of
shares traded over the last 3 months was approximately 2.3 million.
The upsurge in the stock price also reflects the company's positive
earnings momentum. We have observed that V.F. Corp. has beaten the
Zacks Consensus Estimate in 17 of the past 18 quarters, registering
an average positive surprise of 8.9%. In the last concluded
quarter, earnings per share outdid the Zacks Consensus Estimate by
4.7%. The company also provided an impressive guidance for fiscal
Adjusted earnings of 67 cents per share surged 12% year over year
and came in ahead of the Zacks Consensus Estimate of 64 cents per
share. Results mainly benefited from a sustained performance from
the company's Outdoor & Action Sports business of brands such
as The North Face, Vans and Timberland. Additionally, gross margin
improvement in every segment boosted earnings.
V.F. Corp.'s total revenue of $2,780.8 million grew nearly 6.5%
year over year on the back of double-digit revenue growth at its
Outdoor & Action Sports, international as well as
direct-to-consumer businesses. Moreover, reported sales surpassed
the Zacks Consensus Estimate of $2,765 million.
Furthermore, the company seems confident about 2014, mainly on the
back of its strong brand portfolio. For 2014, it envisions
delivering results at the high end of its previously stated
guidance of a 7-8% increase in revenues, considering favorable
growth in all its coalitions. For the second quarter, the company
expects revenue growth to be similar to the first-quarter level,
driven by continued strength at the Outdoor & Action Sports
Based on the marginally higher-than-expected earnings results for
the first quarter, the company now projects adjusted earnings for
2014 to rise 13% year over year to $3.06 per share. Previously, the
company had projected earnings in the band of $3.00-$3.05 per
share, representing 11-13% growth.
Looking at the company's valuation we note that the stock is
expensive, trading at a forward price-earnings ratio (P/E) of
20.6x, a 19.8% premium to the peer group average of 17.2x. However,
the Zacks Rank #2 (Buy) company's long-term estimated earnings per
share growth rate of 13.5% is higher than the peer group growth
rate of 12.8%, which justifies its lofty valuation. Also, the last
traded price is nearly 6.2% below the Zacks Consensus average
analyst price target of $67.73, which indicates that there is
sufficient upside potential for the stock.
Apart from V.F. Corp., other retail stocks such as
Rite Aid Corp.
Foot Locker Inc.
) achieved new 52-week highs of $8.02, $49.63 and $100.63,
respectively, on May 13, 2014.
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