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Will Currency Woes Subdue V.F. Corp's (VFC) Q2 Earnings?
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V.F. Corporation (VFC - Free Report) is slated to release second-quarter 2016 results on Jul 22. Last quarter, the company had delivered a positive earnings surprise of 3.4%. However, it has underperformed the Zacks Consensus Estimate by an average of 0.8% over the trailing four quarters. Let’s see how things are shaping up for this announcement.
Despite beating earnings estimates in the previous quarter, V.F. Corp. continued to battle foreign currency headwinds, which have been weighing upon its performance for a while now. In fact, going forward, the company expects the adverse currency fluctuations to persist and hurt results, as is evident from its 2016 outlook, wherein currency translations are anticipated to have a 1 percentage point and 70 basis points negative impact on revenues and gross margin, respectively. Further, while currency neutral earnings are expected to increase 11%, reported earnings are projected to improve only 5%.
Also, management had provided its view regarding the company’s results for the first half of 2016. For the said period, management anticipates revenue to remain flat year over year (up at a low single-digit rate on a currency neutral basis). Earnings for the first half of the year are expected to drop at a low double-digit rate (fall at a low single-digit rate on a currency neutral basis). This further highlights the threats posed by the currency headwinds.
Earnings Whispers
Our proven model does not conclusively show that V.F. Corp. is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for V.F. Corp. is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 34 cents.
Zacks Rank: V.F. Corp. carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Caterpillar Inc. (CAT - Free Report) , scheduled to report earnings on Jul 26, has an Earnings ESP of +2.08% and a Zacks Rank #3 (Hold).
Amazon.com, Inc. (AMZN - Free Report) , slated to report earnings on Jul 28, has an Earnings ESP of +37.72% and a Zacks Rank #3.
AutoNation, Inc. (AN - Free Report) , slated to report earnings on Jul 29, has an Earnings ESP of +4.76% and a Zacks Rank #3.
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Will Currency Woes Subdue V.F. Corp's (VFC) Q2 Earnings?
V.F. Corporation (VFC - Free Report) is slated to release second-quarter 2016 results on Jul 22. Last quarter, the company had delivered a positive earnings surprise of 3.4%. However, it has underperformed the Zacks Consensus Estimate by an average of 0.8% over the trailing four quarters. Let’s see how things are shaping up for this announcement.
V F CORP Price and EPS Surprise
V F CORP Price and EPS Surprise | V F CORP Quote
Factors Influencing this Quarter
Despite beating earnings estimates in the previous quarter, V.F. Corp. continued to battle foreign currency headwinds, which have been weighing upon its performance for a while now. In fact, going forward, the company expects the adverse currency fluctuations to persist and hurt results, as is evident from its 2016 outlook, wherein currency translations are anticipated to have a 1 percentage point and 70 basis points negative impact on revenues and gross margin, respectively. Further, while currency neutral earnings are expected to increase 11%, reported earnings are projected to improve only 5%.
Also, management had provided its view regarding the company’s results for the first half of 2016. For the said period, management anticipates revenue to remain flat year over year (up at a low single-digit rate on a currency neutral basis). Earnings for the first half of the year are expected to drop at a low double-digit rate (fall at a low single-digit rate on a currency neutral basis). This further highlights the threats posed by the currency headwinds.
Earnings Whispers
Our proven model does not conclusively show that V.F. Corp. is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for V.F. Corp. is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 34 cents.
Zacks Rank: V.F. Corp. carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Caterpillar Inc. (CAT - Free Report) , scheduled to report earnings on Jul 26, has an Earnings ESP of +2.08% and a Zacks Rank #3 (Hold).
Amazon.com, Inc. (AMZN - Free Report) , slated to report earnings on Jul 28, has an Earnings ESP of +37.72% and a Zacks Rank #3.
AutoNation, Inc. (AN - Free Report) , slated to report earnings on Jul 29, has an Earnings ESP of +4.76% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>