I was looking at VF Corporation in May. in my post VF Corporation – is a short term weakness a sign? I found company still expensive, although at that time it was one of the worst performing Aristocrat in 2016. Let’s make some brief update.

Share price performance is even worse currently, as YTD company is around -11% vs S&P500 around +10%. Huge difference.

Let’s look on last financial results:

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As we can see on continuing operations results are OK – there is some growth.

“We continue to operate in an uneven, global economic environment including especially sluggish retail conditions in the Americas, our largest market,” said Eric Wiseman, VF Chairman and Chief Executive Officer. “With a strong balance sheet, powerful brands, and a growing global presence, we have great confidence in our ability to maintain near-term profitability, yet we’re not satisfied with our third quarter results. We remain sharply focused on operational improvements and taking advantage of this environment to accelerate strategies to create sustainable, long-term growth opportunities for our brands.”

Well, almost any company complaints about something. I am wondering how much of these complaints are due to management showing vs supervisory board how well they are doing, although market is tough…

Current valuation (on next year consensus):

P/E = 15.7

EV/EBITDA = 11.1

Dividend yield = 3% + buyback around 2% annually (average last 3 years), together 5% – not bad!

Shares are down and EPS in 2016 is to be up by 7% – value for money is getting more and more appealing.

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If we look on market consensus results should increase in next years.

 

Summing up, it’s not a fault of management that share price is performing bad. Valuation was simply too high. Business is growing and currently after a decline valuation is getting attractive. It seems that time to buy is coming…

 

Disclaimer VFC – no position