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V.F. Corp (VFC) to Post Q3 Earnings: What's in the Cards?

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V.F. Corporation (VFC - Free Report) is slated to report third-quarter fiscal 2020 results on Jan 23, before the opening bell. This lifestyle apparel designer player delivered a negative earnings surprise of 3.1% in the last reported quarter. However, the company’s earnings outperformed the Zacks Consensus Estimate by 6.9%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for fiscal third-quarter earnings has remained unchanged at $1.21 over the past 30 days. This suggests a decline of 7.6% from the year-ago period’s reported figure. Further, the consensus mark for revenues is pegged at $3,425 million, indicating a decrease of 13.1% from the figure reported in the year-ago quarter.

Key Factors to Note

V.F. Corp has been witnessing soft revenues in Timberland and Dickies brands. Notably, softness in Europe is hurting revenues at the Timberland brand. Additionally, changes in the planned business model in South America negatively impacted the brand’s global revenue growth in the last reported quarter. Meanwhile, the Dickies brand is faced with headwinds related to timing of shipments in the U.S. mass channel. The company expects relatively soft performance at the Timberland and Dickies brands for fiscal 2020. This gives out negative signal for the quarter under review as well.

V.F. Corporation Price, Consensus and EPS Surprise

Further, macroeconomic challenges and currency headwinds, owing to the company's vast international presence, have been affecting its performance. We note that V.F. Corp expects adverse currency rate to hurt revenues and earnings per share by $60 million and 3 cents, respectively, in fiscal 2020. Also, the ongoing disruption in Hong Kong and incremental tariffs are likely to hurt results in the near term. Uncertainty related to Brexit is hampering growth in the EMEA segment. All these factors are likely to have impacted the company’s performance in the quarter to be reported.

Nevertheless, V.F. Corp has been gaining from strong core brands (Vans and The North Face). In fact, the Vans brand continues to display strength, with solid revenue growth across all regions, channels and product categories. Further, robust growth at international and direct-to-consumer businesses as well as Active, Outdoor and Work segments has been aiding results for a while.

Also, the company is focused on selling directly to consumers and investing in digital platforms for its brands, along with robust international expansion strategy. Moreover, it is on track with its transformation plan.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for V.F. Corp this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

V.F. Corp carries a Zacks Rank #4 (Sell) and Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combinations

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:

lululemon athletica inc. (LULU - Free Report) currently has an Earnings ESP of +1.60% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

PVH Corp. (PVH - Free Report) currently has an Earnings ESP of +0.55% and a Zacks Rank #3.

Wynn Resorts, Limited (WYNN - Free Report) presently has an Earnings ESP of +9.76% and a Zacks Rank #3.

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