What happened
Shares of V.F. Corporation (VFC 8.13%) turned in another strong performance last month, gaining 13% in July, according to data from S&P Global Market Intelligence. The parent of brands including Vans, Wrangler, and Timberland built on momentum from the first half of the year, and rose on a strong first-quarter earnings report.
As the chart below shows, the stock gained on a pair of bullish analyst notes before jumping on the earnings report that came out on July 20.
So what
Shares of V.F. Corp jumped 5% on July 16 following two analyst endorsements at the end of the previous week. Deutsche Bank's Paul Trussell initiated coverage with a buy rating and a price target of $93, citing tailwinds from the company's acquisition of Williamson-Dickie late last year, its strong position in outdoor brands (a growing category), and its opportunity for margin expansion.
Image source: Vans.
Merrill Lynch echoed those claims, saying that Vans, the skateboard shoe that's one of V.F.'s biggest brands, was gaining momentum into the back-to-school season.
Finally, the company confirmed those endorsements with its own strong earnings report, as sales of Vans jumped 35% in the quarter. Overall revenue from continuing operations increased 23%, to $2.79 billion, or 12% excluding the impact of acquisitions, beating estimates at $2.68 billion. Adjusted gross margin increased 90 basis points, to 50.5%, and adjusted earnings per share jumped 62%, to $0.43, breezing past estimates at $0.33.
Now what
Looking ahead, V.F. said it now expected a 10%-11% increase in revenue, up from a prior range of 9%-10%, to $13.6 billion-$13.7 billion. On the bottom line, it sees adjusted earnings per share increasing 12%-14%, to $3.52-$3.57, up from previous guidance of $3.48-$3.53.
V.F.'s tried-and-true formula of acquiring well-known apparel brands and unlocking their profit potential continues to deliver results. The stock is now up 24% year to date and 47% over the last year.
