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 0.59%, juxtaposed with a three-month change of -10.14%. 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, with a market cap of $6.3 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 and a decent operating margin of 6.76%, the company's financial metrics raise concerns about its future performance.
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 is lower than Benjamin Graham's preferred threshold of five, indicating potential difficulties in managing interest expenses. The Altman Z-Score of 1.29 falls below the distress zone, suggesting a risk of financial distress. A low cash-to-debt ratio of 0.14 and a high debt-to-equity ratio of 3.48 further underscore the company's debt management challenges. Moreover, the debt-to-Ebitda ratio of 10.33 exceeds Joel Tillinghast's cautionary level, indicating a precarious financial position.
Growth Prospects
VF Corp's growth trajectory appears to be stunted, as reflected by its zero Growth rank. This lack of growth, coupled with a one-star predictability rank, adds to the uncertainty surrounding the company's revenue and earnings consistency. The absence of significant growth prospects is a red flag for investors looking for long-term value appreciation.
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. For GuruFocus Premium members seeking to find companies with robust GF Scores, the GF Score Screen is an invaluable tool for uncovering such investments.
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.
