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 4.64%, juxtaposed with a three-month change of -10.18%. 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 Business
VF Corp (VFC, Financial) is a key player in the apparel and accessories market with a market cap of $7.36 billion and sales of $11.39 billion. The company boasts an operating margin of 8.97% and has a diverse portfolio of brands including Vans, The North Face, Timberland, Supreme, and Dickies. VF Corp markets its products globally through various channels, including wholesale, e-commerce, and branded stores. With a history dating back to 1899, the company has expanded through multiple acquisitions, cementing its 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 55.33% of its industry peers, signaling potential difficulties in managing interest expenses. The Altman Z-Score of 1.53 falls below the distress threshold, indicating possible financial distress in the near future.
The company's cash-to-debt ratio at 0.06 and a debt-to-equity ratio of 3.53, which is higher than 96.2% of industry counterparts, suggest an over-reliance on borrowing. Furthermore, a debt-to-Ebitda ratio of 7.97 exceeds the cautionary level set by Joel Tillinghast, highlighting the company's high debt levels relative to earnings before interest, taxes, depreciation, and amortization.
Growth Prospects
A lack of significant growth is another area where VF Corp seems to falter, as evidenced by the company's low Growth rank. The company's predictability rank of one star out of five adds to investor uncertainty regarding the consistency of revenue and earnings, further dampening the growth outlook for VF Corp.
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 companies with stronger financial health and growth prospects may benefit from exploring other options. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
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.
