uploads///vfc pm

BB&T Capital Downgrades V.F. Corporation to ‘Hold’

By

Updated

Price movement of V.F. Corporation

V.F. Corporation (VFC) has a market cap of $26.8 billion. VFC fell by 1.1% to close at $63.38 per share on April 25, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -1.8%, -1.1%, and 2.4%, respectively, as of the same day. This means that VFC is trading 1.0% below its 20-day moving average, 0.80% below its 50-day moving average, and 4.0% below its 200-day moving average.

Article continues below advertisement

Related ETF and peers

The PowerShares DWA Momentum ETF (PDP) invests 1.0% of its holdings in V.F. Corporation. The ETF tracks an index of 100 US-listed large- and midcap companies selected and weighted by relative stock performance. The YTD price movement of PDP was -1.3% as of April 22, 2016.

The market caps of V.F. Corporation’s competitors are as follows:

The Gap (GPS) — $9.3 billion

Ralph Lauren (RL) — $7.9 billion

Columbia Sportswear Company (COLM) — $4.3 billion

BB&T Capital downgraded V.F. Corporation

BB&T Capital Markets has downgraded V.F. Corporation rating to ‘hold’ from ‘buy’.

Article continues below advertisement

Performance of VFC in 4Q15 and 2015

V.F. Corporation (VFC) reported fiscal 4Q15 total revenues of $3,412.8 million, a fall of 4.6% compared to total revenues of $3,578.9 million in fiscal 4Q14. Revenues of outdoor & action sports, jeanswear, imagewear, sportswear, and contemporary brands segments fell by 2.9%, 2.5%, 13.1%, 9.2%, and 18.9%, respectively, in fiscal 4Q15, compared to fiscal 4Q14. It reported impairment of goodwill and intangible assets of $143.6 million in fiscal 4Q15, compared to $396.4 million in fiscal 4Q14.

VFC’s net income and EPS (earnings per share) rose to $312.2 million and $0.72, respectively, in fiscal 4Q15, compared to $122.1 million and $0.28, respectively, in fiscal 4Q14.

Fiscal 2015 results

In fiscal 2015, VFC reported total revenues of $12,376.7 million, a rise of 0.77% YoY (year-over-year). Its net income and EPS rose to $1,231.6 million and $2.85, respectively, in fiscal 2015, compared to $1,047.5 million and $2.38, respectively, in fiscal 2014.

VFC’s cash and cash equivalents fell by 2.7% and inventories rose by 8.7% in fiscal 2015. Its current ratio fell to 2.1x and debt-to-equity ratio rose to 0.79x, in fiscal 2015, compared a current ratio and a debt-to-equity ratio of 2.5x and 0.75x, respectively, in fiscal 2014.

Projections

V.F. Corporation (VFC) has made the following projections for fiscal 2016:

  • Revenue is expected to increase at a mid-single-digit percentage rate, including about 1% of negative impact from changes in foreign currency.
  • Gross margin is expected to improve by about 0.50% to 48.8%, which includes about 0.70% of headwinds from changes in foreign currency.
  • EPS is expected to increase by 11%.
  • Cash flow from operations is expected to be $1.3 million.
  • An effective tax rate of ~23%.
  • Capital expenditures of ~$300 million.
  • VFC expects to repurchase ~$1 billion under its share repurchase program.

Now, let’s take a look at Fortune Brands.

Advertisement

More From Market Realist