VF Corporation (VFC) 2014 Review

VF Corporation is the world’s largest apparel maker and distributor. It is a leader in jeanswear, sportswear, imagewear and workwear. Its brands include Lee, Wrangler, Jansport, Nautica, The North Face, Vans, Napaplin, Timberland, Kipling and Reef. The company has grown its profits and dividend at a 12-13% rate over the last 10 years earning a 15-20% return on equity.  It has raised its dividend every year for the last 20 years. Despite tough conditions in many of its product categories in 2009, management negotiated this period with barely a hiccup and set the company on a course to continue to grow earnings by:

(1) the strength of VFC’s brand management strategy provides a competitive advantage with regard to distribution as well as benefiting it tough economic periods,

(2) its long history of manufacturing and engineering expertise produces cost and service benefits,

(3) margin expansion,

(4) international expansion. 

Negatives:

(1)        its large international business exposes it to the vagaries of foreign laws and regulations as well as currency fluctuations,

(2)        intense competition,

(3)        a customer base that remains sensitive to economic conditions.

VFC is rated A by Value Line, has a 20% debt to equity ratio and its stock yields 1.7%.  Its strong cash flow should allow for increasing its dividend, stock buy backs and acquisitions. 

Statistical Summary

                 Stock      Dividend         Payout      # Increases   

                Yield      Growth Rate     Ratio       Since 2004

VFC            1.7%           16%            33%             10

Ind Ave       1.2               10               24               NA  

                 Debt/                        EPS Down       Net        Value Line

                 Equity         ROE      Since 2004      Margin       Rating

VFC          20%            22%            1                 12%           A

Ind Ave     31               16              NA                9              NA

     Chart

            Note: VFC stock made great progress off its November 2008 low, quickly surpassing the downtrend off the July 2007 high (straight red line) and the November 2008 trading high (green line).  Long term, it is in an uptrend (blue lines).  Intermediate term it is an uptrend (purple lines).  Short term it is in a trading range (brown line).  The wiggly red line is the 50 day moving average.  The Dividend Growth and High Yield Portfolios own 50% positions in VFC, having Sold Half in early 2012.  The upper boundary of its Buy Value Range is $18; the lower boundary of its Sell Half Range is $44.

    

http://finance.yahoo.com/q?s=VFC

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