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Factors to Decide the Fate of V.F. Corp (VFC) in Q4 Earnings

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V.F. Corporation (VFC - Free Report) is slated to report fourth-quarter fiscal 2020 results on May 15, before the opening bell. This lifestyle apparel designer player delivered a positive earnings surprise of 1.7% in the last reported quarter. However, the company’s earnings outpaced the Zacks Consensus Estimate by 2.3%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for fiscal fourth-quarter earnings of 11 cents per share suggests a decline of 81.7% from the year-ago period’s reported figure. Moreover, it has moved down by 15.4% in the past seven days. The consensus mark for revenues is pegged at $2.33 billion, indicating a decrease of 27.5% from the figure reported in the year-ago quarter.

Key Factors to Note

In response to the coronavirus outbreak, all of V.F. Corp’s stores across North America have remained closed since Mar 16. Further, the company earlier closed all stores in China due to the outbreak on Feb 7, which almost extended till the end of March. We expected the store closures in China and North America to have material impacts on the company’s top and bottom-line results for the fourth quarter of fiscal 2020.

VF Corporation Price and EPS Surprise


VF Corporation Price and EPS Surprise

VF Corporation price-eps-surprise | VF Corporation Quote

Further, the travel disruptions due to the pandemic are likely to have hurt the company’s supply chain in the quarter. In February, V.F. Corp estimated significant supply-chain disruptions to mar the top line as around 16% of its goods sold are sourced directly from Mainland China. Nearly 7% of these are transported to the United States.

Additionally, the company recently reported disappointing preliminary expectations for fiscal 2020, which also indicate significant impacts on the fourth-quarter results. It expects preliminary revenues, on a reported basis, of $11.3-$11.4 billion, including the contributions from the Occupational Workwear business, which was put up for divestiture on Jan 21, 2020. The company expects to report operating income from continuing operations of $1-$1.1 billion, on a reported basis, including the Occupational Workwear business. Adjusted operating income for fiscal 2020 is expected to be $1.4-$1.5 billion.

The Occupational Workwear business was included in the aforementioned preliminary results. However, the company expects to report the business as discontinued operations in conjunction with its fourth quarter and fiscal 2020.

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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

V.F. Corp has a Zacks Rank #5 (Strong Sell) and Earnings ESP of +9.40%.

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:

BJs Wholesale Club Holdings Inc (BJ - Free Report) currently has an Earnings ESP of +6.42% and it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

GameStop Corp (GME - Free Report) presently has an Earnings ESP of +56.70% and a Zacks Rank #2.

Guess Inc (GES - Free Report) currently has an Earnings ESP of +15.43% and a Zacks Rank #3.

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