#$vfc

Visa (V): The credit card industry is going through an expansive overhaul given the rise of new technologies. Merchants are now more than ever moving away from legacy contracts towards mobile payments. Some of this includes the emergence of payments app like Square and Venmo but also the increasing adoption of Samsung and Apple pay. Visa’s stake in Square and recent partnership with PayPal should help them remain relevant as technology becomes a bigger part of the payments space.

Meanwhile, Visa’s first quarter partnered with Costco is proving to be favorable. Costco recently said that about 85% of the 11.4 million co-branded American Express cards have been changed to Visa card and activated. An additional 1.1 million members have applied for the new card since the transition.

There still remains a handful of near term headwinds impacting the credit space and Visa. Volatile exchange rates, Brexit uncertainty and weaker spending habits could all dent Monday’s results.

Sonic Corp (SONC): Earlier this month, Sonic released weak preliminary results for the fourth quarter. The drive-in chain reported adjusted earnings per share of 43 cents to 45 cents, versus the Estimize consensus forecast of 44 cents. They also released same store sales projections of a 2% decline. Shares have since slid over 5% ahead of the actual report. Sonic has been unable to gather steam like many of its peers in the fast food industry. The third quarter saw earnings per share, net income and margins drastically decline on slower consumer trends. McDonald’s better than expected report earlier today may set a new tone for the fast food industry this earnings season, but based on preliminary results that may not have an impact on Sonic

V.F. Corporation (VFC): Shares have dropped nearly 15% this year on consecutive weaker than expected quarters that resulted in negative growth. Performance has been hampered lately from the ongoing fluctuations in the currency market and a slowdown in consumer spending. The company’s sales outlook was trimmed recently after it suspended operations of its contemporary brand and the bankruptcy in the sporting goods space. Analysts at Estimize are optimistic that its well established brands like the North Face and Timberland can make significant gains and offset previous losses. Current estimates are forecasting a 7% increase on the bottom line and 1% on the top, marking the first quarter in over a year that growth was positive.

Kimberly Clark Corporation (KMB): Despite a better than expected second quarter, the stock is down 10% over the past 3 months. The consumer staples company has struggled to jumpstart growth given ongoing currency headwinds and increasing competition. New cost controls and restructuring have slightly eased these pains, but not enough to appease investors. Regular buybacks and moves to reduce expenses will be ongoing until earnings and revenue growth are sustainable

T-Mobile (TMUS): T-Mobile burst on to the scene a few years ago and disrupted the wireless industry to benefit the consumer. Lower prices and comparable service have put a strain on traditional power players, Verizon and AT&T, and have pushed them to explore new revenue streams. Verizon is exploring its options in the media space with acquisitions of AOL and Yahoo, while AT&T is having its hand at the cable industry. T-Mobile, on the other hand, is sticking to building out its wireless technology and attracting new customers. This has been largely successful as evidenced by the past few quarterly reports. The past 2 quarters recorded double digit gains on the top line with analysts projecting a 21% gain for the upcoming quarter.

U.S. equities were hammered this Friday after historically dovish Fed official Eric Rosengren indicated that a gradual rate hike would help prevent the economy from overheating. Fresh signs that the central bank is poised to tighten monetary policy could spark a prolonged sell off until it's late September FOMC meeting.  Through this uncertainty the Forcerank consensus data continues to accurately predict the relative price movement of various equities. This week they included winners and losers in the apparel, social media and energy sectors.

The apparel game highlighted gains from Under Armour (UA) and losses from VF Corporation (VFC). Under Armour received a nice boost this week after kicking off its promotional tour in China. The campaign featured their most popular sponsor, Stephen Curry, who is likely to help increase sales in the region. If Under Armour can create a meaningful presence in China, which it had otherwise lacked, it will close the gap between them and Nike.

VF Corporation, on the other hand, took a beating this week after Buckingham Research lowered its rating to neutral from a buy. The company has delivered negative earnings and revenue growth for 3 consecutive quarters driven by increasing competition in the footwear space. Shares of VF Corp were down 2.7% last week and nearly 20% in the past 6 months.

Facebook (FB) headlined the winners of this week’s social media contest. Most analysts recommend Facebook as a “buy” as it continues to see growth in monthly active users. On Wednesday, Morgan Stanley increased its price target on the tech giant from $150 to $160, implying an additional 20% of upside. Yelp (YELP) was the worst ranked and performing stock of this particular game. Most widely used technical indicators supported a pullback even though the stock has performed well this year.

The last of our games brings us to the energy sector. Up until Friday energy had been surging with day after day of gains. Crude oil jumped to nearly $48 Thursday, after opening at $44 Monday morning, only to tumble to $46 in Friday’s drop off. Hess (HES) was amongst the biggest losers dropping over 5% on the week with a majority of that coming from Friday alone. Exxon Mobil (XOM), on the other hand, remained resilient through this latest downturn. Shares were essentially flat for the week.

Each week, Forcerank runs a variety of games covering different industries. What we have found, is that the highest ranked companies in their respective games deliver the greatest positive price movement while the worst ranked companies post the biggest losses. To access this information earlier in the week play next week’s games and test your knowledge against  hundreds of investment professionals.

Click here to play now and gain actionable insights.

Photo Credit: Sarah Marshall

Under pressure to adapt to consumer shopping habits, the companies face a tough task ahead divesting underperforming labels while demand for apparel deals is on the wane.

by Richard Collings

Clothing conglomerates VF Corp. (VFC), PVH Corp. (PVH) and Iconix Brand Group Inc. (ICON) are looking to sell underperforming brands, say industry sources, but they will face a challenge in that effort since the current level of demand for apparel deals is not very robust.

PVH and Iconix officials didn't immediately respond to a request for comment. VF has said, though, that it could sell brands in its portfolio, but declined to comment on specific brands.

Like all apparel companies that rely in part on a wholesale model and sell inventory to customers that include ailing department stores, VF, PVH and Iconix are all under increasing pressure as consumers' shopping habits continue to evolve.

The pace of change has forced key apparel players to not only adapt, but to sell the stagnant or even flailing parts of their businesses.

At PVH, for example, the focus now is largely on its flagship Calvin Klein and Tommy Hilfiger brands.

The company, however, has sought to sell portions of its "heritage" brands, which includes Van Heusen, Izod, Arrow, Olga, Warner's and Speedo.

An industry source said that PVH would eagerly welcome interest in those brands, but would seek to be compensated for the loss in cash flow relative to the company's valuation multiple. That multiple currently stands at nearly 9.2 times adjusted Ebitda, utilizing data provided by Bloomberg.

PVH discarded one of its heritage businesses, G.H. Bass & Co., in late 2013, with G-III Apparel Group Ltd. (GIII) paying nearly $50 million for it.

The Olga, Warner's and Speedo brands, which PVH still owns, account for around $450 million in net sales, according to the company's regulatory filings.

The remainder of the brands include Van Heusen, Izon and Arrow, and likely generate around $1.3 billion in net sales.

Of interest would be the wholesale operations of the heritage division, which had about $1.4 billion in net sales as of Feb. 1, 2015, and earnings before interest and taxes, or Ebit, of nearly $100 million, according to a Form 10-K filed with the Securities and Exchange Commission on April 1.

The retail operations of the brands that PVH would like to part with are faring poorly, however, with a loss of Ebit of nearly $25 million, according to the same filing.

Altogether, the heritage businesses generated close to $1.8 billion in net sales and Ebit of roughly $75 million.

If PVH could obtain a multiple of between 9 times and 10 times Ebitda for any of its heritage brands, or the equivalent to the conglomerate's multiple, it could then use that money to buy back stock or pay off debt.

But finding a buyer willing to pay a multiple rich enough may be tough, considering that the brands up for sale must contend with the decline of retail malls and their department store anchors, an industry source said.

Likewise, VF is weighing divestitures, as previously reported, but has since declined to comment on which specific brands it is selling.

The apparel group is most likely to part with brands in its "contemporary" division, said a source.

That's because those brands, including 7 For All Mankind, Splendid and Ella Moss, haven't performed very well since VF bought them between 2007 and 2009.

Splendid and Ella Moss were both picked up for at least nearly $210 million, which is the amount VF paid to buy the remainder it did not only ready own. Those brands combined generated nearly $100 million in revenue in 2009.

When 7 For All Mankind was bought in 2007 for $775 million, the designer denim business had $300 million in revenue.

But those brands haven't grown and have actually shrunk in size and been a disappointment, according to the source.

In 2015, the three brands had about $340 million in revenue, which compares to $400 million in revenue in 2014, according to regulatory filings, a drop of roughly 15%.

Profit also dropped for the contemporary brands division from more than $23 million in 2014 to close to $6 million in 2015.

As for Iconix, expect more deals like the one the apparel company recently inked, selling the Badgley Mischka intellectual property to Titan Industries Inc. and founders Mark Badgley and James Mischka for $16 million in cash, said an industry source.

There won't be a line of buyers, the source said, but there are brands Iconix owns which could perhaps be sold back to the original founders with the assistance of other investors with deep pockets.

Brands such as Joe Boxer, Mossimo, Buffalo David Bitton, Rocawear and Ecko Unltd. that have been founded in the recent past still have living founders who may want to be reunited with their creations.

On Wednesday we told you that our data indicated Deckers was in for a bad earnings report.

Specifically, we said that "2014’s holiday season saw 39.6% less social mentions indicating purchase intent for Uggs than the same period in 2013," and that Decker's could have a bad earnings report on Thursday.

Turns out, the data was right on.  Thursday, the company reported a big earnings miss, specifically citing weak sales of its core Classic Uggs brand.  

You'll note that the social data doesn't correlate with sales on a 1:1 basis (it NEVER does); Uggs sales did not drop 39.6%.  What the social data did do was give us signal that enthusiasm for the brand was way down... which gave us a statistical edge going into the earnings report which allowed traders to make a directional prediction.  

The stock is reacting appropriately at the open this morning, and quite profitably for those who utilized the edge that LikeFolio social data provided:

But there's a lot more to this story than just the headline numbers.  And more opportunity to come.

In that same article, we noted that social sentiment for ALL Deckers' brands was climbing significantly.  In its earnings report, $DECK specifically mentioned the success they are having with alternate brands, which saw a sales increase near 100% for the quarter.

That's good news for the company as we go from here-- their strategy of diversifying brand offerings is working, and resonating with consumers.  We see no reason to continue to be negative on $DECK, and will hold off on predictions until there is new data to support it.

More importantly, that's good news for followers of social-data investing.  It means, like the $BEBE call before it, social data is giving us significant signal when it comes to fashion apparel companies.

So... what are we watching for next?

We're going to stick with what is working... 1) social volume around purchase intent, and 2) consumer sentiment around key brands.

Here are a few companies we'll be watching over the next weeks:

VF Coropration ($VFC) -- Earnings are coming on Friday Feb 13 prior to the market open.  We'll be digging into social-data around The North Face, Timberland, Vans and Nautica brands.

Nike ($NKE) -- Earnings on March 19.  We're curious not only how the main brand is performing, but also about the consumer enthusiasm around its alternate brands like Converse and especially Hurley, which caters to a younger audience.

We're also going to dig in on Under Armor, Adidas, and Sketchers.  Those are just the type of company we love to find signal on because their revenues are so tied to a single dominant brand.

Remember, social-data doesn't provide signal for every company every time. And it's not 100% predictive (nothing is.)  

We're simply looking for statistically significant shifts in the data that can give us an edge that others don't have, and for this earnings' season that's adding up to a lot of opportunity.

V.F. Corp. (VFC) is set to report FQ4 2013 earnings before the market opens on Friday, February 14th. V.F. Corporation is an American clothing company that owns brands including Wrangler, Lee Jeans, The North Face, Chic, Timberland, and Nautica. Holiday sales were weak across the board this year, which retailers have blamed on poor weather. Despite the broad reduction in December sales, some retailers have managed to report great quarters. Michael Kors (KORS) and Fossil (FOSL) both reported much better than expected earnings this month and their stock prices have taken off. On the other side of the coin Coach (COH) recently missed Wall Street’s target for its quarterly earnings and Best Buy (BBY) announced much weaker than previously anticipated mid quarter sales. Here’s how investors expect VFC to report Friday.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.

(Click Here to see All Estimates for VFC)

The current Wall Street consensus expectation is for VFC to report 84c EPS and $3.358B revenue while the current Estimize.com consensus from Buy Side and Independent contributing analysts is 85c EPS and $3.375B revenue. This quarter the buy-side as represented by the Estimize.com community is expecting VFC to beat Wall Street’s expectations on both EPS and revenue.

Throughout the previous 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting VFC’s EPS every time and has been more accurate in predicting revenue twice. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market’s actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a smaller differential than usual for VFC.

The distribution of estimates published by analysts on the Estimize.com platform range from 75c to 90c EPS and $3.290B to $3.511B in revenues. This quarter we’re seeing a larger distribution of estimates for VFC.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings.

Throughout the quarter the EPS consensus from Wall Street decreased from $3.47 to 96c while the Estimize EPS consensus fell from $1.69 to 85c. Over the same time period Wall Street raised its revenue expectation from $3.344B to $3.358B while the Estimize consensus began the period at  $3.353B and shot to highs before falling back down to $3.375B. Timeliness is correlated with accuracy and falling analyst estimates going into a report are often a bearish indicator.

The analyst with the highest estimate confidence rating this quarter is shahlamagne who projects 90c EPS and $3.435B in revenue. In the Winter 2014 season shahlamagne is rated as the 376th best analyst and is ranked 67th overall among over 3,850 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case shahlamagne is making a bullish call expecting VFC to beat the Estimize consensus on both profit and revenue.

While holiday sales were weak this season, contributing analysts on the Estimize.com platform still expect VFC to beat the expectations from Wall Street. Although the Estimize community expects VFC’s profit to be down significantly compared to last year, the community is also expecting V. F. Corp. to increase sales by 11% and continue to expand its apparel empire.