Comparing VFC’s ratings with peers
VFC is covered by 21 Wall Street analysts. It has received a 2.7 rating on a scale where one is a “strong buy” and five is a “strong sell.” The company has a better rating than peers Gap (GPS), Ralph Lauren (RL), and Michael Kors (KORS), which are rated a 3.1, 3.1, and 2.9, respectively. However, Hanesbrands (HBI) and PVH (PVH) have better ratings of 1.9 and 2.2, respectively.
Wall Street’s recommendations
29% of the analysts that cover VFC recommend buying the stock. 62% recommend holding it, while 10% suggest selling it. In comparison, 71% of analysts suggest buying HBI, and 73% recommend buying PVH. VFC has a higher “buy” percentage as compared to Ralph Lauren with 5%, Michael Kors with 11%, and Gap with 14%.
VFC stock has a downside of 1%
VFC stock is currently trading at $55.72, ~17% below its 52-week high price. Wall Street expects its price to fall further to $54.90 over the next 12 months, which indicates a downside of ~1%. Individual target prices for the company range between $47 to $69.
All other major branded apparel companies have upsides from their current stock prices. The most attractive picks currently seem to be Gap and HBI with respective upsides of 20% and 15%. PVH and Kors have upsides of 7% and 11%, respectively.
A quick look at valuation
VFC is trading at a one-year forward PE (price-to-earnings ratio) of 18.7x, in line with the three-year average of 19.5x. It trades at a premium to PVH at 14.5x and Hanesbrands at 11.5x. The two companies, however, have better earnings potentials as well as stock upsides to VFC.
While VFC’s earnings are likely to fall 1% over the next 12 months (or NTM), PVH and HBI are expected to register a rise of 11.3% and 5.5% in their NTM per share earnings, respectively.
Investors looking for exposure to VFC can consider the PowerShares High Yield Equity Dividend Achievers Portfolio (PEY), which invests 1.6% of its portfolio in VFC.