V.F. Corp Closes at All-Time High


Shares of V.F. Corporation (VFC) touched a new 52-week high of $245.79 at the close of trade on Dec 20, 2013, beating its previous high of $238.25 attained on Dec 2. The shares of this Zacks Rank #3 (Hold) company have been gaining momentum, driven by the company’s sustained focus on geographic expansion, a disciplined capital strategy and effective implementation of long-term growth strategies. Further, V.F. Corp.’s consistently positive earnings surprise trend, robust organic revenue growth and strong guidance instills confidence in the stock.

This year, shares of VF Corp. have amassed a year-to-date return of 63.5%. Average volume of shares traded over the last three months was approximately 587.4K. Moreover, the company currently trades at a forward P/E of 22.4x, a 22.4% premium to the peer group average of 18.3x.

V.F. Corporation’s diversified brand portfolio positions the company well above its peers to generate above-average industry growth and sustain itself in the current challenging environment. Moreover, the company is aggressively seeking to expand its international operations, particularly in Asia Pacific, which is one of the fastest growing regions. In China, the company plans to increase its store count to 6,000 over a period of 5 years from approximately 2,300 stores at present.

Going forward, V.F Corporation expects to increase its international operations contribution toward total revenue to 38% in 2013 and 43% by 2017. We believe that the company’s sustained focus on expanding its international operation will boost its top line in the long run, while reducing the risk of operating in a single market.

V.F. Corporation has always maintained a disciplined capital allocation strategy, focused on making investments to develop its business, while using the excess cash to enhance shareholder returns through dividend payouts and share buybacks. The company’s strong cash generation ability enables it to reduce long-term debts and return cash to shareholders.

The company’s sound capital position was evident from its recently approved four-for-one stock split  and a 21% hike in quarterly cash dividend to $1.05 per share, both of which were payable on Dec 20.

With promising top-line growth and margin expansion, V.F. Corporation appears to be an attractive option for investors in the near future. The company has surpassed the Zacks Consensus Estimate for the past 16 consecutive quarters and is expected to continue with its upbeat performance, going forward.

Management’s impressive guidance for 2013 enhances the company’s growth prospects. V.F. Corporation reiterated its adjusted earnings guidance for 2013 at $10.85 per share, based on anticipated revenue growth of 6% and gross margin expansion of nearly 150 basis points (bps).

Apart from V.F. Corp, other stocks such as The Walt Disney Company (DIS), Foot Locker Inc. (FL) and Under Armour Inc. (UA) achieved new 52-week highs of $73.56, $41.12 and $87.92, respectively, on Dec 20, 2013.

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