Long-established in the Manufacturing - Apparel & Accessories industry, VF Corp (VFC, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.06%, juxtaposed with a three-month change of -13.88%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of VF Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 6/10
- Growth rank: 0/10
- GF Value rank: 4/10
- Momentum rank: 5/10
Based on the above method, GuruFocus assigned VF Corp the GF Score of 61 out of 100, which signals poor future outperformance potential.
Understanding VF Corp's Business
VF Corp, with a market cap of $6.70 billion and sales of $11.39 billion, is a key player in the apparel and accessories sector. The company boasts an operating margin of 8.97% and has a diverse portfolio that includes popular brands like Vans, The North Face, Timberland, Supreme, and Dickies. VF Corp's products are marketed globally through various channels, including wholesale, e-commerce, and branded stores. The company's history of growth through acquisitions dates back to 1899, showcasing its long-standing presence in the industry.
Financial Strength Breakdown
VF Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The interest coverage ratio of 4.59 positions VF Corp worse than 56.12% of its industry peers. This ratio, which is below the preferred benchmark set by Benjamin Graham, highlights potential challenges in managing interest expenses on debt.
The company's Altman Z-Score of 1.51 falls below the distress threshold, indicating possible financial distress in the near future. Moreover, the low cash-to-debt ratio of 0.06 and a high debt-to-equity ratio of 3.53, which is worse than 96.38% of the industry, signal an over-reliance on borrowing. The debt-to-Ebitda ratio of 7.97 further exacerbates the concern, surpassing Joel Tillinghast's cautionary level and indicating a red flag for the company's debt management.
Growth Prospects
VF Corp's growth trajectory appears to be stunted, as reflected by its Growth rank of 0/10. This lack of growth, coupled with a predictability rank of just one star, casts doubt on the company's ability to maintain revenue and earnings consistency, further contributing to investor uncertainty.
Next Steps
Considering VF Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors seeking more robust investment opportunities may explore companies with stronger GF Scores using the GF Score Screen. As VF Corp navigates through these financial and growth challenges, value investors must weigh the risks and opportunities before making investment decisions.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
