V.F. Corporation Falls To Extreme Low On Weak Guidance Shares of V.F. Corporation (NYSE: VFC) fell in the wake of the Q3 earnings report and for good reason. The company had a good quarter but one that came with...

High-Quality Dividend Payer V.F. Corporation Goes On Sale

Shares of V.F. Corporation (NYSE: VFC) fell in the wake of the Q3 earnings report and for good reason. The company had a good quarter but one that came with some weaker than expected guidance that led to a quick reset in prices we view as an opportunity for investors. While the outlook is a little weaker than expected the company is still in great shape, forecasting growth, and paying a dividend that we see as safe and growing. If you are looking to get into high-quality dividend stocks at discounted prices this one should be on your watchlist.

"The broad-based momentum across our brands is testament to the resilience of our diversified portfolio model, which has enabled us to deliver a strong quarter and reaffirm our full-year earnings outlook in a challenging environment. I am confident that VF remains well-positioned for continued, profitable, long-term growth," said Steve Rendle, VF's Chairman, President and CEO.

V.F. Corporation Has Strong Quarter

V.F. Corporation had such a good quarter and gave such good guidance that it is hard to see where the negatives are. The $3.62 billion in revenue is up 21.9% over last year on the combination of 15% organic growth and acquisitions made during the year. The revenue beat the consensus by 27 basis points and led to bottom-line strength as well. Activewear led with a 25% increase that included an 8% increase in the Vans brand. Outdoor wear increased by 23% and Workwear by 6%, all aided by a 30% increase in DTC and eCommerce channels. International sales were also strong at up 19%.

Moving down the report, the company experienced a 60 basis point improvement in adjusted gross margin and a 230 basis point improvement in the adjusted operating margin. This is due to higher sell-through, decreased or non-existent mark-down activity, and higher realized selling prices and resulted in $1.35 in adjusted EPS. The EPS beat the consensus by $0.13 and the margin strength is expected to continue into the end of the year.

It is the guidance, however, that is giving the market indigestion. While the margins are expected to hold up into the end of the year revenue weakness is showing up in the numbers. The new guidance for revenue is down by $0.15 to $11.85 billion compared to the Marketbeat.com consensus of $11.95 billion with EPS maintained at the previous level. At face value, this a good thing but ultimately means EPS would have outpaced consensus and there is a risk revenue will fall short of guidance as well. The key takeaway, however, is that revenue and earnings are growing and fueling a safely growing dividend and share repurchases.

V.F. Corporation Is A High-Yield With An Outlook For Dividend Growth

V.F. Corporation pays an attractively high 3.18% dividend yield that we view as safe and growing. The company not only has a track record for distribution growth but a balance sheet and cash flow statement to back it up. The next increase may not be much bigger than 5% but we think it is as guaranteed as a Wall Street dividend can be.

Shares of the stock are falling despite the strong results and outlook for earnings but we are viewing the move as a buying opportunity. Price action has fallen to a new, extreme low without the indications to support a deeper decline and support is already apparent. The first hurdle will be resistance at the $67 level but we don't think it will hold up price action for long.