As of July 19, 2023, the stock price of VF Corp (VFC, Financial) has seen a significant change of 4.92%, reaching $20.46 per share. With a market cap of $8 billion, an EPS of $0.31, and sales amounting to $11.6 billion, VF Corp (VFC) presents an intriguing case for value investors. The GF Value, a unique indicator of a stock's intrinsic worth, stands at $71.58, suggesting that VF Corp (VFC) could potentially be a value trap.
VF Corp (VFC, Financial) is a renowned entity in the fashion industry, known for designing, producing, and distributing branded apparel, footwear, and accessories. With a portfolio boasting brands like Vans, The North Face, Timberland, Supreme, and Dickies, VF (VFC) has a diverse offering catering to active, outdoor, and work apparel categories. The company operates globally, marketing its products in the Americas, Europe, and Asia-Pacific through various channels, including wholesale sales to retailers, e-commerce, and branded stores owned by the company and partners.
Understanding the GF Value of VF Corp (VFC, Financial)
The GF Value of VF Corp (VFC) is calculated based on historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $20.46 per share, VF Corp (VFC) gives every indication of being a possible value trap.
The Altman Z-score of VF Corp (VFC, Financial) is 1.44, indicating that the company is in the distressed zone and implies a higher risk of bankruptcy. A score above 2.99 would indicate safer financial conditions. To understand how the Z-score measures the financial risk of the company, please click here.
VF Corp (VFC, Financial)'s Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss. To avoid such a loss, an investor must review a company’s financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are great ways to understand its financial strength. VF Corp (VFC) has a cash-to-debt ratio of 0.1, which ranks worse than 77.34% of companies in the Manufacturing - Apparel & Accessories industry. The overall financial strength of VF Corp (VFC) is 4 out of 10, indicating poor financial health.
Profitability of VF Corp (VFC, Financial)
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. A company with high profit margins is usually a safer investment than those with low profit margins. VF Corp (VFC) has been profitable 9 out of the past 10 years. Over the past twelve months, the company had a revenue of $11.6 billion and an EPS of $0.31. Its operating margin is 9.15%, which ranks better than 74.4% of companies in the Manufacturing - Apparel & Accessories industry. The profitability of VF Corp (VFC) is ranked 6 out of 10, indicating fair profitability.
Growth of VF Corp (VFC, Financial)
Growth is a crucial factor in the valuation of a company. If a company's business is growing, the company usually creates value for its shareholders, especially if the growth is profitable. Conversely, if a company's revenue and earnings are declining, the value of the company will decrease. VF Corp (VFC)’s 3-year average revenue growth rate is better than 56.41% of companies in the Manufacturing - Apparel & Accessories industry. However, its 3-year average EBITDA growth rate is -23.1%, which ranks worse than 89.36% of companies in the same industry.
ROIC vs WACC of VF Corp (VFC, Financial)
Comparing a company’s return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate its profitability. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, VF Corp (VFC)’s ROIC was 27.37, while its WACC came in at 7.62.
Conclusion
In conclusion, the stock of VF Corp (VFC, Financial) gives every indication of being a possible value trap. The company's financial condition is poor, and its profitability is fair. Its growth ranks worse than 89.36% of companies in the Manufacturing - Apparel & Accessories industry. To learn more about VF Corp (VFC) stock, you can check out its 30-Year Financials here.
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