How Would VF Corp. Look In Your Portfolio Right Now?

| About: V.F. Corporation (VFC)

How do you look in your Wrangler or Lee Jeans right now? How would the maker of those popular brands look in your portfolio right now?

VF Corp. (NYSE:VFC) manufactures branded jeanswear, outdoor apparel, sportswear, athletic apparel, and occupational apparel. Some of their brands include Majestic, Nautica, Vans, Timberland, The North Face, Lee, Wrangler, etc.

The company is headquartered in Greensboro, North Carolina and has a market cap of $13.84 billion. Over the last four quarters, earnings have grown by 7%, 11%, 12%, and 15% respectively. This is very good growth in an economy that has grown by just over 1% during that same period of time.

Earnings are expected to grow by 23% this year and another 16.8% next year. In addition to this, earnings are expected to grow by 13% per year over the next five years.

Growth Est VFC Industry Sector S&P 500
Current Qtr. 15.30% 19.50% 30.70% 23.40%
Next Qtr. 34.30% 68.60% 48.40% 30.20%
This Year 23.10% 11.80% 9.70% 14.60%
Next Year 16.80% 22.40% 14.80% 14.60%
Past 5 Years (per annum) 4.82% N/A N/A N/A
Next 5 Years (per annum) 13.00% 15.69% 13.56% 10.81%
Price/Earnings (avg. for comparison categories) 14.91 13.53 14.63 12.07
PEG Ratio (avg. for comparison categories) 1.15 0.90 1.23 3.71

The company is expected make $7.93 per share this year and $9.26 next year. The company will report its quarterly earnings on October 21st. VF Corp. is expected to make $2.56 per share.

Earnings Est Current Qtr.
Sep 11
Next Qtr.
Dec 11
Current Year
Dec 11
Next Year
Dec 12
Avg. Estimate 2.56 2.39 7.93 9.26
No. of Analysts 13.00 14.00 12.00 14.00
Low Estimate 2.39 2.19 7.75 9.10
High Estimate 2.92 2.51 8.04 9.55
Year Ago EPS 2.22 1.78 6.44 7.93

Obviously, earnings estimates are just that- estimates. Companies can meet estimates, exceed estimates, or beat estimates. VF Corp. has a long history of beating estimates, but there are no guarantees. The fact of the matter is that stocks trade on earnings estimates until they change. The estimates look favorable right now.

If the S&P 500 does indeed slip into bear market territory and our country enters back into another recession, then all bets are off, however. If VF Corp. does deliver $9.26 in earnings next year, and if it can continue to grow those earning by 13.0% per year over the next five years, then the company would be making $15.13 per share, five years from now.

The stock is currently trading at a PE ratio of 18. Over the last four quarters, the PE ratio has ranged between 11-18. Over the last five years the stock has had an average PE 14.41

Avg P/E
11-Jan 15.3
10-Jan 15.4
9-Jan 12.9
7-Dec 15.4
6-Dec 14
5-Dec 13.5
5-Jan 13.7
4-Jan 12.4
3-Jan 12.3
1-Dec 19.2
Avg. 14.41

I am using a multiple of 15.5 to calculate a five year target price:

$15.13 X 15.5 = $234.53 = 96.4% upside potential.

Click on charts to enlarge:

While I am a big fan of value, I like some performance along with my value. I wrote an entire article on this concept several months ago.

Let's now take a look at the performance of VF Corp:

As you can see, the stock has handily outperformed the market over the last 1, 3, 5, and 10 years. It has performance to go along with that value. I like that combination. The stock also even outperformed the S&P during the 2008 sell-off. It was down 17.5%, while the S&P 500 was down by 38.5%!

V F Corp. currently has everything I like to see in a stock. It has a good chart, it still has good value, and the performance has been fantastic. It gets an "A" grade in my proprietary grading system. Only 8% of approximately 2,700 stocks gets an "A" grade at the current time.

Now if we can just hold off that growling bear!

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in VFC over the next 72 hours.