Story updated at 10 a.m. to reflect market activity.
Shares of VF Corp fell 0.2% to $61.55 in morning trading.
The firm maintained its "buy" rating for the apparel company. Analysts Michael Binetti, Steven Strycula, and K.C. Stumbaugh said clean retail inventories are good for fall orders and gross margin. The analysts also cited accelerating organic growth and high potential for M&A.
"We believe reiterated positive comments at our conf about the 2H14 outlook are based on encouraging early indications from retailers of planned orders for next fall-boosting our confidence in VFC's '14 guidance," the analysts wrote. "Importantly, we believe there's a high probability of M&A in '14-which should con't to support VFC's premium P/E. "
TheStreet Ratings team rates VF CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate VF CORP (VFC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 48.94% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, VFC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- VF CORP has improved earnings per share by 10.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VF CORP increased its bottom line by earning $2.71 versus $2.43 in the prior year. This year, the market expects an improvement in earnings ($3.05 versus $2.71).
- Despite its growing revenue, the company underperformed as compared with the industry average of 15.9%. Since the same quarter one year prior, revenues slightly increased by 8.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although VFC's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.36, which illustrates the ability to avoid short-term cash problems.
- You can view the full analysis from the report here: VFC Ratings Report