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 1.29%, juxtaposed with a three-month change of -19.78%. 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: 5/10
- 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 63 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 $5.94 billion and sales of $10.82 billion, the company operates with an operating margin of 6.76%. VF Corp's portfolio includes popular brands such as Vans, The North Face, Timberland, Supreme, and Dickies. The company markets its products globally through various channels, including wholesale, e-commerce, and branded stores. Founded in 1899, VF Corp has expanded its reach through multiple acquisitions, cementing its place in the apparel 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 3.09 positions VF Corp worse than 63.55% of its industry peers, signaling potential challenges in managing interest expenses. The Altman Z-Score of 1.27 falls below the distress threshold, indicating possible financial distress in the near future. A low cash-to-debt ratio of 0.14 and a high debt-to-equity ratio of 3.48 further exacerbate the concern, suggesting an over-reliance on borrowing. Moreover, the debt-to-Ebitda ratio of 10.33 exceeds the cautionary level set by Joel Tillinghast, highlighting the company's financial leverage risks.
Growth Prospects
VF Corp's growth trajectory appears to be stunted, as reflected by its non-existent Growth rank. The company's one-star predictability rank further adds to the uncertainty surrounding its revenue and earnings consistency, making it difficult for investors to anticipate future performance.
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 explore other opportunities with stronger financial health and growth prospects. 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.
