VF (VFC) Showing Signs Of Being Water-Logged And Getting Wetter

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified VF ( VFC) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified VF as such a stock due to the following factors:

  • VFC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $95.6 million.
  • VFC has traded 411,919 shares today.
  • VFC traded in a range 411.7% of the normal price range with a price range of $3.50.
  • VFC traded below its daily resistance level (quality: 79 days, meaning that the stock is crossing a resistance level set by the last 79 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on VFC:

V.F. Corporation designs, manufactures, markets, and distributes branded lifestyle apparel, footwear, and accessories in the United States and Europe. The stock currently has a dividend yield of 1.8%. VFC has a PE ratio of 30.8. Currently there are 14 analysts that rate VF a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for VF has been 2.1 million shares per day over the past 30 days. VF has a market cap of $31.1 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.04 and a short float of 1.1% with 2.96 days to cover. Shares are down 2.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates VF as a buy. 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, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.9%. Since the same quarter one year prior, revenues slightly increased by 8.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Although VFC's debt-to-equity ratio of 0.26 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 1.39, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for VF CORP is rather high; currently it is at 50.57%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.41% trails the industry average.
  • Net operating cash flow has increased to $1,330.78 million or 22.31% when compared to the same quarter last year. Despite an increase in cash flow of 22.31%, VF CORP is still growing at a significantly lower rate than the industry average of 97.76%.
  • VF CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, VF CORP reported lower earnings of $2.39 versus $2.71 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $2.39).

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