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 1.39%, juxtaposed with a three-month change of -3.87%. 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 designs, produces, and distributes branded apparel, footwear, and accessories. With a market cap of $6.5 billion and sales of $11.39 billion, the company operates with an 8.97% operating margin. Its portfolio of about a dozen brands includes Vans, The North Face, Timberland, Supreme, and Dickies. VF Corp markets its products in the Americas, Europe, and Asia-Pacific through wholesale sales to retailers, e-commerce, and branded stores owned by the company and partners. The company has grown through multiple acquisitions and traces its roots to 1899.
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 it worse than 54.7% of 702 companies in the Manufacturing - Apparel & Accessories industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The Altman Z-Score of just 1.5 is below the distress zone of 1.81, suggesting potential financial distress in the coming years. Furthermore, the low cash-to-debt ratio at 0.06 indicates a struggle in handling existing debt levels. The debt-to-equity ratio of 3.53 is worse than 96% of 925 companies in the industry, and the debt-to-Ebitda ratio of 7.97 exceeds Joel Tillinghast's warning level of 4, indicating a red flag unless tangible assets cover the debt.
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 is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
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 should be cautious and consider these factors when evaluating the company's future prospects. For those seeking more robust investment opportunities, GuruFocus Premium members can find companies with strong GF Scores using the 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.
