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Morgan Stanley Downgraded VF Corporation to ‘Underweight’

Yesterday’s Consumer Pops and Drops: UA, VFC, BC, HOG, HBI, and PF

(Continued from Prior Part)

VF Corporation’s price movement

VF Corporation (VFC) has a market cap of $24.1 billion. After Morgan Stanley downgraded the stock from “equal-weight” to “underweight,” it fell by 3.0% to close at $56.45 per share as of January 11, 2016. The price movement on a weekly, monthly, and YTD (year-to-date) basis is -7.3%, -10.0%, and -9.3%, respectively.

Technically, the stock broke the support. It’s trading below all of the moving day averages. Currently, VF Corporation is trading 8.7% below its 20-day moving average, 11.7% below its 50-day moving average, and 18.8% below its 200-day moving average.

The PowerShares DWA Momentum ETF (PDP) invests 1.1% of its holdings in VF Corporation. PDP tracks an index of 100 US-listed large and mid-cap companies selected and weighted by the relative stock performance. PDP’s YTD price movement is -6.4% as of January 8, 2016.

VF Corporation’s competitors and their market caps are:

  • Gap (GPS) – $9.1 billion

  • Kohl’s (KSS) – $9.5 billion

  • Columbia Sportswear (COLM) – $3.2 billion

Morgan Stanley downgraded VF Corporation

Morgan Stanley downgraded VF Corporation from “equal-weight” to “underweight.” It set the price target at $58 from $66 per share.

VF Corporation’s performance in fiscal 3Q15

VF Corporation reported total revenue of $3,612.8 million in fiscal 3Q15—a rise of 2.6% compared to net sales of $3,520.4 million in fiscal 3Q14. The company’s operating income rose by 1.5% in fiscal 3Q15—compared to the same period last year. Its net income and EPS (earnings per share) fell to $459.9 million and $1.07, respectively, in fiscal 3Q15—compared to its net income and EPS of $470.5 million and $1.08, respectively, in fiscal 3Q14.

Meanwhile, its cash and cash equivalents and inventories rose by 14.1% and 11.8%, respectively, in fiscal 3Q15—compared to the same period last year. Its DE (debt-to-equity) ratio rose to 0.99 in fiscal 3Q15—compared to a DE ratio of 0.84 in fiscal 3Q14.

VF Corporation’s PE (price-to-earnings) and PBV (price-to-book value) ratios are 23.4x and 4.5x, respectively, as of January 8, 2016.

Projections

The company made the following projections for fiscal 2015:

  • revenue is expected to rise by 7.5%

  • gross margin is expected to rise by 70 basis points

  • EPS is expected to rise by 15%

Continue to Next Part

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