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Hope VFC Stock Performs Again With Blessing From Cramer



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February 5th, 2007 by financetwitter


Feb 05 2007
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My God, have you seen how Cognizant Technology Solutions Corp. (Nasdaq: CTSH, stock) flies today? I think I should take money off the table and not let my greed rules me. It didn’t disappoint me when I asked myself can this Fastest Growing Tech To Sustain 45 Degrees Uptrend?
Anyway, VF Corporation (NYSE: VFC, stock) will announce its’ earning tomorrow, Tuesday 6-Feb-2007 before market open. VFC is a leader in branded lifestyle apparel including jeanswear, outdoor products, image apparel and sportswear. Its principal brands include Wrangler(R), Lee(R), Riders(R), Rustler(R), The North Face(R), Vans(R), Reef(R), Napapijri(R), Kipling(R), Nautica(R), John Varvatos(R), JanSport(R), Eastpak(R), Lee Sport(R) and Red Kap(R).
Recently VFC (Nasdaq:) was reported to be selling its intimate apparel lines to Warren Buffett Berkshire Hathaway’s (NYSE: BRK.A, stock) Fruit of the Loom for $350 million – a figure said to be low (the stock price was punished) but analysts said the move has long-term benefits due to weak store sales. UBS Equities analyst Jeffrey B. Edelman points out that intimate apparel represented only 12 percent of VF’s sales and wasn’t an integral part of its growth strategy.

The company just completed its’ acquisition of Eagle Creek which will give it one more name in its growing stable of outdoor brands, including Vans, the North Face, JanSport, and Eastpak. VF says Eagle Creek will add $30 million to 2007 sales and sustain high single-digit sales growth over the next couple of years.

Rating Indicators for VFC:
  • Wall Street consensus : 1.22
  • StockScouter rating : 8 / 10
  • Whisper Number for this stock : 1.25
  • Schaeffer rating for this stock : 4.5 / 10
  • Power Rating : 5 / 10
  • Insider Trading (last 52 weeks) : ($58.18M)
  • Zacks Analysts Rating: Hold
  • Option Trading: May 2007 80 Call
  • Implied Volatility (IV) for Mar 2007 $80 Strike : 22.40%

Sales, Income & Growth – For the past 12-months, VFC registered $6.08 Billion sales versus the industry’s $2.96 Billion. Income amounted to $519.37 Million against the industry’s $210.30 Million. While VFC 12-months sales growth is at 10.10%, the income growth is in the region of 10.30% (the same industry sector sales growth at 12.60% with income of 29.00%).

Profitability & Financial Health – For the past 12-months, net profit margin is in the region of 8.5%. VFC has a debt/equity ratio of 0.32 compare to industry’s ratio of 1.86.

Stock Resistance & Support Level – The resistance is at 79.47 (50-day moving average) while the first level support is at 71.53 (200-day moving average).

Risks – Shares are heavily sold by financial institution.

After the announcement of its sale to Berkshire Hathaway, the stock price took a beating and current stock price should have taken that into consideration. This stock is one of the favorites of Jim Cramer. He named VF Corp. as his first fallen angel because he considers the $350 million sale of intimate apparel business as a great move due to the “razor-thin margins”. And since it’s gone now, VFC is free to “let its other higher margin businesses shine.”

I have invested VFC before via option trading during the previous earning. It gapped-up but for a short-while which I hope will not happen again this time around.

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February 5th, 2007 by financetwitter
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