Money and Finance
The Continued Sell-Off In Shares Of V.F. Corporation Is Juicing Expected Returns
Chances are you have at least a couple of clothing items that V.F. Corporation (NYSE:VFC) offers within your closet. Whether it's jeans, backpacks, t-shirts, jackets, shoes, boots, you name it and V.F. Corporation likely sells it. Among its brands, it has 2 that provide over $2 billion in annual revenue and several sporting double-digit year-over-year growth. Shares have continued to trend lower due to low retail expectations and currency headwinds; however, the shares offer a compelling valuation at current levels.
V.F. Corporation is a dividend aristocrat with 43 consecutive years of increasing dividends. Every $1 invested in VFC 10 years ago is worth $5.76 today which is a 19.1% annualized return. Every $1 invested in VFC 20 years ago is worth $15.66 today, which is an excellent 14.7% annualized return.
Projected Earnings and Dividend GrowthBefore we move into the valuation analysis, let's get some general information out of the way. The reference entry price will be the closing price from December 21, $62.35, with an assumed purchase date of December 23. For fiscal-year 2015, V.F. Corporation is expected to earn between $3.11 and $3.18 with dividend payments totaling $1.33. This pegs the 2015 payout ratio between 41.8% and 42.8%. Return calculations will go through December 31, 2018 at a price of 20x 2018 earnings per share.
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