Long-established in the Manufacturing - Apparel & Accessories industry, VF Corp (VFC, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 2.35%, juxtaposed with a three-month change of -2.66%. 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: 5/10
- Profitability rank: 6/10
- Growth rank: 0/10
- GF Value rank: 4/10
- Momentum rank: 4/10
Based on the above method, GuruFocus assigned VF Corp the GF Score of 62 out of 100, which signals poor future outperformance potential.
Understanding VF Corp's Business
VF Corp, with a market cap of $6.47 billion and sales of $10.82 billion, is a key player in the apparel and accessories sector. The company boasts a diverse portfolio of brands such as Vans, The North Face, Timberland, Supreme, and Dickies, catering to active, outdoor, and work apparel categories. VF Corp operates globally, distributing products through wholesale, e-commerce, and branded stores. Despite its impressive history dating back to 1899, the company's operating margin stands at 6.76%, reflecting the competitive nature of the industry and the challenges it faces.
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 3.09 positions VF Corp worse than 63.33% of its industry peers, signaling potential difficulties in managing interest expenses. The Altman Z-Score of 1.31, below the distress threshold, further indicates possible financial distress in the near future.
The company's low cash-to-debt ratio at 0.14 and a high debt-to-equity ratio of 3.48, compared unfavorably with industry standards, suggest an over-reliance on borrowing. Moreover, the debt-to-Ebitda ratio of 10.33 exceeds the cautionary level set by Joel Tillinghast, 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 is a significant concern for investors looking for long-term value appreciation. Additionally, the company's predictability rank of one star out of five exacerbates the uncertainty surrounding its revenue and earnings consistency, making it difficult for investors to forecast future performance with confidence.
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 may want to look for companies with stronger financial health, more robust growth prospects, and higher GF Scores. For those seeking to identify such companies, GuruFocus Premium members can utilize the GF Score Screen for more refined investment opportunities.
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.
