there is a strong correlation between cotton prices and VFC EPS. See the trend here? current cotton price is 83.3 cents per lb- expect strong upward guidance here is the proof! VF Corp Earnings vs Cotton Prices
Good post ... question: is there any correlation between RL and VFC? Also TRLG missed on every metric last week, is there reason to be concerned? Next, Europe, will this have an impact on earnings? RL reported great numbers, EXPE last week said their Q4 was comparable to Q3, meaning they didn't see further slowdown in Europe.
Historically RL and VFC have traded similarly- even in the last quarter- they clearly maintained thatthere was no slow down in Europe- RL said the same thing- no deceleration in Europe( expedia is not in the same market but it helps) From all these dta points they should blow through estimates by atleast 15 cents9That has been the average beats for the last 3 quarters) and Timberland would be more integrated into earnings- they havea higher gross margin.
I also have to add the CFO said the lower denim prices will not show up in their guidance till 2nd quarter of 2012- the fall has been dramatic even from 3rd quarter prices for cotton- currently at 83 cents a lB and still headed lower! That bodes well for stronger guidance- which is key for significant appreciation. Here is what I expect- a share price above 145$ prior to earnings and a run to $160 after earnings- a beat by 15 cents and higher guidance for rest of 2012!
other than gross margins RL and VFC are almost similar- both have market caps around 15B- RL has 58.7 gm while VFC has 10 points lower! But both stocks have a tendency to go up dramatically after earnings beat- VFC has done that consistently over 8 quarters- and we are supposed to be in a recessionary period! The only thing that could derail this is a greek default(which is not likely) or ahmedinajad- closing the straits of Hormuz and declaring that he has a nuclear weapon( this is really stretching it too much)!