The Ratings Game: Vans parent is right on track despite earnings miss, according to analysts and executives

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Investors may not be happy with VF Corp.’s results, but company executives and analysts are just fine with the announcement.

VF Corp. VFC, -0.83%  reported fiscal second-quarter adjusted earnings per share of $1.26, below the $1.31 FactSet consensus, and revenue of $3.39 billion, also below the FactSet guidance of $3.44 billion. For fiscal 2020, the company sees about $11.8 billion and adjusted EPS in the range of $3.32 to $3.37. The FactSet consensus is for revenue of $11.9 billion and EPS of $3.39.

VF Corp.’s brands include Vans, The North Face and Timberland.

“We’re right in line with our plans in terms of where our expectations are,” Scott Roe, chief financial officer for VF Corp., told MarketWatch.

Roe notes the company’s five-year plan, which includes a compound annual growth rate (CAGR) of 7% to 8% from 2019, and the “strong” operational business.

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“Business is solid. Brands are executing. We’re well in line and actually operating slightly ahead,” said Steve Rendle, chief executive of VF Corp., in a conversation with MarketWatch.

And as for the holidays, Rendle says the company is in a good position though they are “sensitive” to the cautionary tone being struck. Moreover, the company has “moved away from department stores and the mid-tier where there are challenges.”

VF Corp. still expects adjusted EPS to be in the range of $3.32 to $3.37, and revenue is still expected to be about $11.8 billion, but there are expected increases in the outdoor category (5%), the work category (up 2% to 3%), international (expected to be up 4% to 5%), and direct-to-consumer (expected to be up 11% to 12%).

Nonetheless, shares closed down 7.3% on Friday, and closed down 0.8% on Monday.

Analysts agree with corporate executives.

“VF Corp. remains an attractive large-cap idea,” wrote Baird, though analysts called the earnings “moderately disappointing.”

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Baird maintained its outperform stock rating and $99 price target.

“VF Corp. has significant competitive advantages that include manufacturing nearly 33% of its product in its owned factories, and owning significant expertise in the supply chain, as well as management’s focus on outdoor, active and work wear brands and ability to reinvest significant amounts of cash flow to innovate product and acquire deep knowledge of their core customer,” wrote Cowen analysts.

Cowen rates VF Corp. shares outperform with a $105 price target.

Wedbush analysts note upside to The North Face and Vans with the Timberland and Dickies brands meeting the company’s plan.

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“Fiscal 2020 should be another year of upward outlook revisions and the higher growth underlying business is supportive of a premium multiple,” analysts led by Christopher Svezia wrote.

Wedbush rates VF Corp. stock outperform with a $98 price target.

VF Corp. stock has gained 24.3% for the year to date while the S&P 500 index SPX, +0.56%   has gained 21.2% for the period.