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VF Corporation Delivers Mixed Q3 Results; Affirms Guidance

VF (VFC) delivered mixed Fiscal Q3 2022 results and reaffirmed its earnings outlook for the year. During the quarter, the company benefited from broad-based momentum across all brands, affirming the resilience of its diversified portfolio model. VFC shares fell 6.52% to close at $62.96 on January 28.

VF Corporation designs, manufactures, and sells lifestyle apparel, footwear, and accessories. VF’s next earnings report for Fiscal Q4 2021 is scheduled for May 20, 2022.

Q3 Results

Revenue in the quarter grew 22% year-over-year to $3.6 billion, slightly below consensus estimates of $3.61 billion. Operating income, on an adjusted basis, increased 40% to $643 million as adjusted operating margins increased by 230 basis points.

VF posted adjusted earnings per share of $1.35, up 45% year-over-year, beating consensus estimates of $1.22 a share. During the quarter, inventory rose 20% year-over-year and the company returned $195 million to shareholders through dividends. It also repurchased $300 million of shares. VF has about $2.5 billion remaining under its current repurchase program.

For the full year, revenue is expected to be approximately $11.85 billion, reflecting growth of about 28%. Adjusted earnings per share are expected to be about $3.20.

The board of directors has approved a $0.50 per share dividend to be paid on March 21, 2022, to shareholders of record on March 10, 2022. VF’s dividends have been increasing over the past two years, leading to a dividend yield of 3.14%.

Stock Rating

Last week, Wells Fargo analyst, Ike Boruchow, reiterated a Buy rating on VF stock and cut the price target to $75 from $85, implying 19.12% upside potential to current levels. According to the analyst, the company’s Q3 results were soft.

Consensus among analysts is a Moderate Buy based on 5 Buys, 8 Holds, and 1 Sell. The average VF price target of $78.85 implies 25.24% upside potential to current levels.

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