Market

4 Reasons Why V.F Corp Is One Of The Best Dividend Aristocrats To Buy

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My biggest ardour in life is instructing traders such as you the secrets and techniques to long-term riches and prosperity.

Above all this implies specializing in security and high quality first, and prudent valuation and sound risk-management all the time.

When pressured to decide on, I can’t commerce even an evening’s sleep for the possibility of additional income.” – Warren Buffett

Today the market is awash in pain and anguish for many new investors, who thought that 3 years of 25% annual returns could continue forever.

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Daily Shot

The Nasdaq composite is about 2,500 companies, roughly 50% of all US-traded companies.

And the median decline right now is 38%. The average market decline in a recession is 36%, so effectively much of the stock market is already priced as if we were in a recession.

But such short-term pain brings the potential for long-term profits.

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Ycharts

Today I wanted to highlight why V.F Corp (NYSE:VFC) is one of the best dividend aristocrat bargains you can safely buy today.

Why? Because VFC is one of the greatest companies on earth, and a proven maser of building long-term income and wealth over time.

VFC Rolling Returns Since 1986

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Portfolio Visualizer Premium

Buying VFC during bear markets can deliver returns as strong as 22% CAGR for the next 15 years.

  • up to 20X returns
  • Buffett-like returns from a low-risk Ultra SWAN dividend king bargain hiding in plain sight

So join me as I show you the three reasons I’ve been buying VFC in this correction and why it might be just what your portfolio needs to help you retire in safety and splendor.

Reason One: World-Class Quality You Can Trust

There are many ways to define and measure quality. So how do I do it?

The Dividend King’s overall quality scores are based on a 248 point model that includes:

  • dividend safety

  • balance sheet strength

  • credit ratings

  • credit default swap medium-term bankruptcy risk data

  • short and long-term bankruptcy risk

  • accounting and corporate fraud risk

  • profitability and business model

  • growth consensus estimates

  • management growth guidance

  • historical earnings growth rates

  • historical cash flow growth rates

  • historical dividend growth rates

  • historical sales growth rates

  • cost of capital

  • GF Scores

  • long-term risk-management scores from MSCI, Morningstar, FactSet, S&P, Reuters’/Refinitiv, and Just Capital

  • management quality

  • dividend friendly corporate culture/income dependability

  • long-term total returns (a Ben Graham sign of quality)

  • analyst consensus long-term return potential

In fact, it includes over 1,000 fundamental metrics including the 12 rating agencies we use to assess fundamental risk.

  • credit and risk management ratings make up 41% of the DK safety and quality model
  • dividend/balance sheet/risk ratings make up 82% of the DK safety and quality model

How do we know that our safety and quality model works well?

During the two worst recessions in 75 years, our safety model 87% of blue-chip dividend cuts, the ultimate baptism by fire for any dividend safety model.

And then there’s the confirmation that our quality ratings are very accurate.

DK Zen Phoenix: Superior Fundamentals Lead To Superior Long-Term Results

Metric US Stocks 191 Real Money DK Phoenix Recs
Great Recession Dividend Growth -25% 0%
Pandemic Dividend Growth -1% 6%
Positive Total Returns Over The Last 10 Years 42% 99.5% (Greatest Investors In History 60% to 80% Over Time)
Lost Money/Went Bankrupt Over The Last 10 Years 47% 0.5%
Outperformed Market Over The Last Decade (290%) 36% 46%
Bankruptcies Over The Last 10 Years 11% 0%
Permanent 70+% Catastrophic Decline Since 1980 44% 0.5%
100+% Total Return Over The Past 10 Years NA 87%
200+% Total Return Over The Past 10 Years NA 66%
300+% Total Return Over The Past 10 Years NA 44%
400+% Total Return Over The Past 10 Years NA 35%
500+% Total Return Over The Past 10 Years NA 27%
600+% Total Return Over The Past 10 Years NA 23%
700+% Total Return Over The Past 10 Years NA 20%
800+% Total Return Over The Past 10 Years NA 18%
900+% Total Return Over The Past 10 Years NA 18%
1000+% Total Return Over The Past 10 Years NA 16%
Sources: Morningstar, JPMorgan, Seeking Alpha

Basically, historical market data confirms that the DK safety and quality model is one of the most comprehensive and accurate in the world.

This is why I and my family entrust almost 100% of my life savings to this model and the DK Phoenix blue-chip strategy.

How does VFC score on one of the world’s most comprehensive and accurate safety models?

VFC Dividend Safety

Rating Dividend Kings Safety Score (161 Point Safety Model) Approximate Dividend Cut Risk (Average Recession)

Approximate Dividend Cut Risk In Pandemic Level Recession

1 – unsafe 0% to 20% over 4% 16+%
2- below average 21% to 40% over 2% 8% to 16%
3 – average 41% to 60% 2% 4% to 8%
4 – safe 61% to 80% 1% 2% to 4%
5- very safe 81% to 100% 0.5% 1% to 2%
VFC 100% 0.5% 1.00%
Risk Rating Low Risk (71st industry percentile consensus) A- stable outlook credit rating 2.5% 30-year bankruptcy risk 20% OR LESS Max Risk Cap Recommendation

Long-Term Dependability

Company DK Long-Term Dependability Score Interpretation Points
Non-Dependable Companies 21% or below Poor Dependability 1
Low Dependability Companies 22% to 60% Below-Average Dependability 2
S&P 500/Industry Average 61% (58% to 70% range) Average Dependability 3
Above-Average 71% to 80% Very Dependable 4
Very Good 81% or higher Exceptional Dependability 5
VFC 100% Exceptional Dependability 5

Overall Quality

VFC Final Score Rating
Safety 100% 5/5 very safe
Business Model 60% 3/3 wide moat
Dependability 100% 5/5 exceptional
Total 98% 13/13 Ultra SWAN Dividend King
Risk Rating 3/3 Low Risk
20% OR LESS Max Risk Cap Rec

5% Margin of Safety For A Potentially Good Buy

VFC: 11th Highest Quality Master List Company (Out of 508) = 98th Percentile

The DK 500 Master List includes the world’s highest quality companies including:

  • All dividend champions

  • All dividend aristocrats

  • All dividend kings

  • All global aristocrats (such as BTI, ENB, and NVS)

  • All 13/13 Ultra Swans (as close to perfect quality as exists on Wall Street)

  • 47 of the world’s best growth stocks (on its way to 100)

VFC’s 98% quality score means its similar in quality to such blue-chips as

  • S&P Global (SPGI) – dividend aristocrat
  • W. W. Grainger (GWW) – dividend king
  • PayPal (PYPL)
  • Ilumina (ILMN)
  • West Pharmaceutical Services (WST) – dividend champion
  • ASML Holding (ASML)
  • Colgate-Palmolive (CL) – dividend king
  • Visa (V)
  • Mastercard (MA)
  • Microsoft (MSFT)

Even among the most elite companies on earth, VFC is higher quality than 98% of them.

Why I Trust VFC And So Can You

VFC is built to last. How do we know this?

  • founded in 1899 in Denver, Colorado

VFC has survived and thrived through

  • 24 recessions
  • two depressions
  • three economic crises/panics
  • inflation ranging from -2.5% to 20%
  • interest rates ranging from 0% to 20%
  • 10-year Treasury yields ranging from 0.5% to 16%
  • 11 bear markets
  • dozens of corrections and pullbacks

VFC owns 15 popular brands of sports and activewear including

  • Vans
  • The North Face
  • Timberland
  • Supreme
  • and Dickies
  • 50% of sales from the US
  • 27% from central and south America
  • 14% Europe
  • 8% other

Investment Thesis Summary

Through dispositions and additions, VF has built a portfolio of strong brands in multiple apparel categories. We view the three brands that account for about 80% of its sales (Vans, Timberland, and The North Face) as supporting VF’s narrow moat based on a brand intangible asset. Despite short-term disruption from the COVID-19 crisis and economic weakness in China, we believe VF will grow faster than most competitors in the long run and maintain its competitive edge.” – Morningstar

Exceptional Management You Can Trust

We assign a capital allocation ranking of Exemplary to VF. We imagine the agency has produced sturdy returns for shareholders….

VF has a powerful stability sheet and capability for additional acquisitions. The agency constantly generates greater than $1 billion per yr in free money circulation to fairness, and its capital expenditures have solely averaged 2% of gross sales over the previous decade. Thus, it accumulates vital money for funding and might borrow cash at low charges….

VF has a strong report of returning money to shareholders. It has elevated its dividend (adjusted for the Kontoor spin) for 50 consecutive years and has sometimes paid shareholders 30%-50% of its earnings as dividends. We anticipate constant annual dividend will increase by way of this decade….

Over the subsequent 5 years, we forecast the corporate will generate $7.8 billion in free money circulation to fairness and return most of it to shareholders in dividends and, to a lesser diploma, inventory buybacks. We imagine an organization will increase shareholder worth if it repurchases inventory under its intrinsic worth.

VF has managed its portfolio of manufacturers nicely and has delivered constant returns to shareholders (an annual common of 11% over the previous 15 years, as of January 2022)…

VF targets 14%-16% annualized complete shareholder return over the subsequent few years, which can be achievable. ” – Morningstar

I agree 100% with Morningstar’s view because VFC is an excellent investor in apparel and lifestyle brands, with an exceptional track record of:

  • smart acquisitions
  • brand building
  • very shareholder and dividend friends
  • a highly adaptable management team and corporate culture
  • conservative balance sheet and payout ratios are what has allowed it to become a dividend king

We delivered strong results in Q3 with organic revenue growth of 16% and organic earnings growth of 32% amidst continuing macro headwinds. Our business is strong and healthy. We achieved our Q3 plan driven by a robust holiday performance and an exceptional quarter from the North Face, which gained further momentum and surpassed $1.2 billion in revenue, a record in its history…

We continue to see broad-based growth across categories with snow sports, sportswear and logowear, all growing over 20%

Off-mountain lifestyle products also showed ongoing strong momentum. The newly launched techwear line, mountain-inspired clothes designed for the city grew over 60% and lifestyle footwear grew 30%… – CEO, Q4 convention name

VFC’s brands are very popular and sales are growing rapidly. Its new brands are also experiencing blockbuster success.

The XPLR Pass loyalty program grew exponentially this quarter, adding 1.1 million new members and 33% more sign-ups during holiday weeks relative to last year, driven by the digital channel.

Total membership is now approaching 9 million, growing about 30% fiscal year-to-date…

Moving on to Vans, which grew 8% in Q3, representing modest growth relative to pre-pandemic levels. Global digital growth continues to be strong, up 54% relative to fiscal ’20 driving 9% D2C growth relative to pre-pandemic levels.” – CEO, Q4 convention name

Digital and direct-to-consumer execution goes very nicely.

In 2019 VFC introduced steering for the subsequent 5 years (nonetheless in impact).

  • 7% to eight% gross sales progress
  • 12% to 14% EPS progress
  • 14% to 16% CAGR complete returns
  • again then VFC yielded 2%
  • now it yields nearly twice as a lot
  • complete return steering now: 15.6% to 17.6% CAGR
  • on par with the best traders in historical past, like John Templeton
  • 15.8% CAGR returns from 1953 to 1992

VFC has a strong plan to ship increased margins and distinctive long-term shareholder returns.

It’s a grasp of profitable M&A having made 16 acquisitions within the final 21 years.

The firm’s technique is closely targeted on:

  • rising Asian gross sales
  • driving extra direct-to-consumer (increased margin) gross sales (Nike’s technique)
  • construct sturdy model loyalty (a concentrate on life-style manufacturers)
  • preserve driving sturdy progress in present manufacturers and proceed buying new ones

VFC’s newest acquisition will increase its complete addressable market to $500 billion vs $11.2 billion final yr. With nearly a 2% market share, VFC’s progress runway is lengthy and huge.

Supreme is the newest model acquisition, which has a goal market of $50 billion per yr and that is rising at double-digits.

Management thinks it may preserve Supreme rising at 8% to 10%, barely quicker than the general firm.

And Vans which represents 33% of gross sales, continues to develop at 12% to 13% and with working margins of just about 25% (double the corporate’s general ranges).

VFC Credit Ratings

Rating Agency Credit Rating 30-Year Default/Bankruptcy Risk Chance of Losing 100% Of Your Investment 1 In
S&P A- steady 2.50% 40.0
Moody’s Baa1 (BBB+ equal) 5.00% 20.0
Consensus A- steady 3.75% 26.7

(Sources: S&P, Moody’s)

VFC has an A-credit ranking from S&P and Moody’s will probably improve their ranking within the subsequent few years.

VFC Leverage Consensus Forecast

Year Debt/EBITDA Net Debt/EBITDA (3.0 Or Less Safe According To Credit Rating Agencies)

Interest Coverage (8+ Safe)

2020 4.53 3.70 7.90
2021 3.34 2.61 10.81
2022 2.70 2.01 14.55
2023 2.41 1.98 19.44
2024 1.95 2.31 30.51
2025 NA NA 35.82
Annualized Change -18.94% -11.05% 40.17%

(Source: FactSet Research Terminal)

Because VFC’s stability sheet is anticipated to get so much stronger after taking a beating through the pandemic.

VFC Balance Sheet Consensus Forecast

Year Total Debt (Millions) Cash Net Debt (Millions) Interest Cost (Millions) EBITDA (Millions) Operating Income (Millions) Average Interest Rate
2020 $5,265 $955 $4,301 $113 $1,163 $893 2.15%
2021 $5,519 $1,611 $4,313 $127 $1,651 $1,373 2.30%
2022 $5,452 $2,192 $4,061 $118 $2,016 $1,717 2.16%
2023 $5,214 $1,836 $4,268 $97 $2,160 $1,886 1.86%
2024 $4,936 $2,301 $5,845 $71 $2,525 $2,166 1.44%
2025 NA NA NA $62 $2,637 $2,221 NA
Annualized Growth -1.60% 24.59% 7.97% -11.31% 17.79% 19.99% -9.52%

(Source: FactSet Research Terminal)

Debt is anticipated to lower progressively over time whereas money grows at 25% yearly and money flows at 17% to twenty% yearly.

VFC Bond Profile

  • $3.6 billion in liquidity
  • nicely staggered debt maturities (little downside refinancing maturing bonds)
  • 100% unsecured bonds (most monetary flexibility)
  • bond traders are so assured in VFC’s long-term power transition plan they’re keen to lend to it for 16 years at 4.6%
  • 2.06% common borrowing price
  • -0.1% inflation-adjusted borrowing prices vs 13.6% returns on capital
  • VFC’s borrowing prices are so low that adjusted for inflation, it is being paid to borrow to develop its enterprise

VFC Credit Default SWAPs: Real-Time Fundamental Risk Analysis From The Bond Market

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(Source: FactSet Research Terminal)

Credit default SWAPs are the insurance coverage insurance policies bond traders take out in opposition to default.

  • they signify real-time elementary threat evaluation from the “smart money” on Wall Street
  • VFC’s elementary threat has been rock regular for six months
  • whereas the worth fell off a cliff
  • analysts, ranking companies, and the bond market all agree
  • VFC’s thesis is undamaged
  • 25 analysts, 7 ranking companies, and the bond market make up our VFC knowledgeable consensus
  • how we monitor elementary threat in real-time
  • to make sure high-probability/low-risk funding suggestions

VFC Profitability: Wall Street’s Favorite Quality Proxy

Historically VFC has maintained above-average profitability in comparison with its friends.

VFC Trailing 12-Month Profitability Vs Peers

Metric Industry Percentile Major Apparel Companies More Profitable Than VFC (Out Of 1,074)
Operating Margin 79.85 216
Net Margin 81.50 199
Return On Equity 95.90 44
Return On Assets 83.33 179
Return On Capital 90.71 100
Average 86.26 148

(Source: GuruFocus Premium)

In the final yr, VFC’s profitability has soared to the highest 14% of its {industry}.

Adjusting for the pure cyclicality of this {industry}, VFC’s industry-leading profitability has been steady for over 30 years, confirming a large and steady moat.

VFC Profit Margin Consensus Forecast

Year FCF Margin EBITDA Margin EBIT (Operating) Margin Net Margin Return On Capital Expansion

Return On Capital Forecast

2020 9.2% 12.2% 9.3% 6.8% 1.16
2021 8.2% 14.7% 12.2% 9.6% TTM ROC 45.53%
2022 8.4% 16.1% 13.7% 10.9% Latest ROC 81.48%
2023 9.1% 16.0% 14.0% 11.2% 2025 ROC 52.67%
2024 10.4% 17.1% 14.7% 11.9% 2025 ROC 94.25%
2025 NA 16.8% 14.2% 11.7% Average 73.46%
2026 NA NA NA NA Industry Median 9.79%
Annualized Growth 3.10% 6.72% 8.71% 11.35% VFC/Peers 7.50
Vs S&P 5.03

(Source: FactSet Research Terminal)

VFC’s margins are anticipated to get well from the pandemic and continue to grow to report highs.

Return on capital is annual pre-tax revenue/working capital (the cash it takes to run the enterprise). ROC is Greenblatt’s gold customary proxy for high quality and moatiness.

  • S&P 500 ROC is 14.6%
  • for every $1 it takes to run the common S&P firm they generate $0.146 in annual pre-tax revenue
  • it takes about 6.5 years for brand new investments to pay for themselves

For VFC ROC was 45% within the final yr and is anticipated to rise to be about 74% in 2025.

  • for each $1 it takes to run VFC it’s at the moment producing $0.74 in annual pre-tax revenue
  • investments take 16 months to pay for themselves

By the definition of one of many biggest traders in historical past, VFC is about 8X increased high quality than its friends and 5X increased high quality than the S&P 500.

VFC Dividend Growth Consensus Forecast

Year Dividend Consensus EPS/Share Consensus Payout Ratio Retained (Post-Dividend) Cash Flow Buyback Potential Debt Repayment Potential
2021 $1.95 $2.73 71.4% $303 1.42% 5.5%
2022 $1.99 $3.52 56.5% $595 2.78% 10.8%
2023 $2.02 $3.94 51.3% $747 3.49% 13.7%
2024 $2.24 $4.65 48.2% $937 4.38% 18.0%
2025 $2.75 $4.82 57.1% $805 3.76% 16.3%
Total 2021 Through 2025 $10.95 $19.66 55.7% $3,388.19 15.83% 61.39%
Annualized Rate 8.97% 15.27% -5.46% 27.63% 27.63% 31.25%

(Source: FactSet Research Terminal)

Credit ranking companies contemplate 60% a secure payout ratio for this {industry}.

VFC usually maintains a really secure 40% payout ratio (30% to 50% historic vary).

Analysts count on the payout ratio to return to secure ranges this yr (2023 on a free money circulation foundation).

$3.4 billion in consensus post-dividend retained earnings is sufficient to repay 61% of present debt or purchase again 16% of shares at present valuations.

Year Consensus Buybacks ($ Millions) % Of Shares (At Current Valuations) Market Cap
2017 $760.0 3.6% $21,401
2018 NA NA $21,401
2019 NA NA $21,401
2020 $249.0 1.2% $21,401
2021 $267.0 1.2% $21,401
2022 $552.0 2.6% $21,401
Total 2017-2022 $1,828.00 8.5% $21,401
Annualized Rate 2.20% Average Annual Buybacks $457.00

(Source: FactSet Research Terminal)

VFC’s historic buybacks since 1989 have averaged 1.1% of web shares annually.

Analysts count on greater than double that fee in 2022 (2.6%).

Time Frame (Years) Net Buyback Rate Shares Remaining Net Shares Repurchased
5 1.1% 94.62% 5.38%
10 1.1% 89.53% 10.47%
15 1.1% 84.71% 15.29%
20 1.1% 80.15% 19.85%
25 1.1% 75.84% 24.16%
30 1.1% 71.76% 28.24%
35 1.1% 67.90% 32.10%
40 1.1% 64.25% 35.75%
45 1.1% 60.79% 39.21%
50 1.1% 57.52% 42.48%
55 1.1% 54.42% 45.58%
60 1.1% 51.50% 48.50%
65 1.1% 48.73% 51.27%
70 1.1% 46.10% 53.90%
75 1.1% 43.62% 56.38%
80 1.1% 41.28% 58.72%
85 1.1% 39.06% 60.94%
90 1.1% 36.95% 63.05%
95 1.1% 34.97% 65.03%
100 1.1% 33.08% 66.92%

(Source: DK Research Terminal, Ycharts)

1.1% annual web buybacks could not sound like a lot, but it surely provides up over time.

And buybacks are simply the cherry on prime of the VFC cake.

Reason Two: Great Growth Prospects For The Foreseeable Future

We’ve already seen how VFC is an {industry} chief in a $500+ billion market, with a doubtlessly decades-long progress runway forward of it. Here’s what analysts count on within the subsequent few years.

VFC Medium-Term Growth Consensus Forecast

Year Sales Free Cash Flow EBITDA EBIT (Operating Income) Net Income
2020 $9,569 $884 $1,163 $893 $654
2021 $11,209 $923 $1,651 $1,373 $1,076
2022 $12,534 $1,056 $2,016 $1,717 $1,367
2023 $13,477 $1,231 $2,160 $1,886 $1,511
2024 $14,780 $1,543 $2,525 $2,166 $1,763
2025 $15,675 NA $2,637 $2,221 $1,834
Annualized Growth 10.37% 14.94% 17.79% 19.99% 22.90%

(Source: FactSet Research Terminal)

VFC’s progress is anticipated to be distinctive now that the pandemic is ending.

Metric 2020 Growth 2021 Growth Consensus 2022 Growth Consensus 2023 Growth Consensus 2024 Growth Consensus

2025 Growth Consensus

Sales 8% -10% 28% 8% 8% 6%
Dividend 12% 2% 2% (official) 2% 11%

23% (53-year dividend progress streak)

EPS -25% -51% 144% 14% 11% 4%
Operating Cash Flow -44% 54% -3% 12% 18% NA
Free Cash Flow -62% 94% -3% 4% 23% NA
EBITDA 28% -22% 30% 12% 6% NA
EBIT (working earnings) -1% -38% 118% 12% 8% NA

(Source: FAST Graphs, FactSet Research Terminal)

VFC’s dividend progress is anticipated to start out accelerating in 2024 and growth in 2025 as its payout ratio comes down.

And what concerning the long-term?

VFC Long-Term Growth Outlook

VFC’s consensus forecast is skewed by Deutsche Bank’s 44.5% CAGR long-term progress forecast.

  • we’re utilizing administration 12% to 14% steering
  • most of VFC’s analyst progress forecasts are 12%, in keeping with administration steering

How correct is administration steering?

  • Smoothing for outliers historic analyst margins-of-error are 15% to the draw back and 30% to the upside
  • margin-of-error adjusted progress steering vary: 10% to 19% CAGR
  • 70% statistical likelihood that VFC grows inside this vary
  • excluding the pandemic, VFC’s historic progress fee is about 10.6% CAGR

Management and analysts suppose barely quicker progress is probably going due to VFC’s sturdy model constructing and nice direct-to-consumer execution.

Reason Three: A Wonderful Company At A Wonderful Price

For the final 7 to twenty years, outdoors of bear markets and bubbles, tens of tens of millions of traders have constantly paid between 17 and 22X earnings for VFC.

  • 91% statistical likelihood that this vary approximates intrinsic worth

Metric Historical Fair Value Multiples (14-Years) 2021 2022 2023 2024 2025

12-Month Forward Fair Value

5-Year Average Yield 2.47% $78.14 NA NA $90.69 $111.34
13-Year Median Yield 2.28% $84.65 NA NA $98.25 $120.61
25- Year Average Yield 2.47% $78.14 $80.97 $80.97 $90.69 $111.34
Earnings 19.67 $53.70 $69.24 $77.50 $91.47 $94.81
Average $71.39 $74.65 $79.20 $92.67 $108.69 $76.05
Current Price $57.63

Discount To Fair Value

19.27% 22.80% 27.23% 37.81% 46.98% 24.22%

Upside To Fair Value (NOT Including Dividends)

23.87% 29.53% 37.42% 60.80% 88.60% 31.96% (35.6% together with dividend)
2022 EPS 2023 EPS 2022 Weighted EPS 12-Month Forward EPS 12-Month Average Fair Value Forward PE

Current Forward PE

$3.52 $3.92 $1.21 $3.64 20.9 15.8

I estimate VFC is value about 21X earnings and as we speak trades at simply 15.8X, a 24% historic low cost to honest worth.

  • no long-term investor in historical past
  • who prevented changing into a pressured vendor for emotional or monetary causes
  • has ever regretted shopping for VFC at underneath 16X earnings.

And guess what? Adjusted for money VFC is buying and selling at simply 13.8X earnings, a PEG of simply 1.1 based mostly on administration steering.

This is Peter Lynch’s progress at an inexpensive worth and much under the corporate’s historic 2.2 PEG.

Analyst Median 12-Month Price Target

Morningstar Fair Value Estimate

$73.06 (20.1 PE) $68.00 (18.7 PE)

Discount To Price Target (Not A Fair Value Estimate)

Discount To Fair Value

20.78% 14.88%

Upside To Price Target (Not Including Dividend)

Upside To Fair Value (Not Including Dividend)

26.23% 17.48%

12-Month Median Total Return Price (Including Dividend)

Fair Value + 12-Month Dividend

$75.06 $70.00

Discount To Total Price Target (Not A Fair Value Estimate)

Discount To Fair Value + 12-Month Dividend

22.89% 17.31%

Upside To Price Target (Including Dividend)

Upside To Fair Value + Dividend

29.68% 20.94%

Morningstar estimates that VFC has 21% upside to honest worth and analysts count on it is going to ship 30% returns within the subsequent yr.

Given its fundamentals, as much as 36% complete returns within the subsequent yr could be justified.

Of course, I do not care about 12-month worth targets, however solely whether or not VFC’s margin of security sufficiently compensates traders for its threat profile.

Rating Margin Of Safety For Low-Risk 13/13 Super SWAN high quality corporations 2022 Price 2023 Price

12-Month Forward Fair Value

Potentially Reasonable Buy 0% $74.65 $79.20 $76.05
Potentially Good Buy 10% $67.18 $71.28 $68.44
Potentially Strong Buy 20% $59.72 $63.36 $60.84
Potentially Very Strong Buy 30% $47.03 $55.44 $53.23
Potentially Ultra-Value Buy 40% $44.79 $47.52 $45.63
Currently $57.88 22.46% 26.92% 23.89%
Upside To Fair Value (Not Including Dividends) 28.97% 36.83% 31.39%

For anybody snug with its threat profile VFC is a doubtlessly sturdy purchase and this is why.

Total Return Potential That Can Help You Retire In Safety And Splendor

For context, this is the return potential of the 14% overvalued S&P 500.

Year EPS Consensus YOY Growth Forward PE Blended PE Overvaluation (Forward PE)

Overvaluation (Blended PE)

2021 $206.12 50.17% 20.7 21.3 20% 21%
2022 $226.19 9.74% 19.9 20.3 16% 15%
2023 $249.08 10.12% 18.1 19.0 5% 8%
2024 $275.28 10.52% 16.3 17.2 -5% -2%
12-Month ahead EPS 12-Month Forward PE Historical Overvaluation PEG 25-Year Average PEG S&P 500 Dividend Yield

25-Year Average Dividend Yield

$233.83 19.358 14.88% 2.28 3.62 1.44% 2.01%

(Source: DK S&P 500 Valuation And Total Return Tool)

Stocks have already priced in 94% EPS progress from 2020 by way of 2024 and are buying and selling at 20X ahead earnings.

  • 16.85 is the 25-year common
  • 16.9 is the 10-year common (low fee period)
  • 16.9 is the 45-year common
  • 91% likelihood that shares are value about 17X ahead earnings
  • A 13.0% correction wanted to get again to the historic market honest worth

S&P 500 2027 Consensus Return Potential

Year Upside Potential By End of That Year Consensus CAGR Return Potential By End of That Year Probability-Weighted Return (Annualized) Inflation And Risk-Adjusted Expected Returns

Expected Market Return Vs Historical Inflation-Adjusted Return

2027 36.03% 6.35% 4.76% 1.45% 22.31%

(Source: DK S&P 500 Valuation And Total Return Tool)

Adjusted for inflation, the risk-expected returns of the S&P 500 are about 1.5% for the subsequent 5 years.

  • 22% of the S&P’s historic inflation-adjusted returns of 6.5% CAGR

S&P 500 Interest Rate Adjusted Market Valuation

S&P Earnings Yield 10-Year US Treasury Yield Earning Yield Risk-Premium (3.7% 10 and 20-year common)
5.17% 2.92% 2.25%
Theoretical Interest Rate Justified Market Fair Value Forward PE Current PE

Theoretically Interest Rate Justified Market Decline

15.10 19.33 21.88%

(Source: DK S&P 500 Valuation And Total Return Tool)

Even adjusting for rates of interest, shares nonetheless require an excellent bigger 22% correction earlier than they turn out to be theoretically pretty valued.

But this is what traders can moderately count on if VFC grows as anticipated over the subsequent 5 years.

  • 5-year consensus return potential vary: 13% to 21% CAGR

VFC 2024 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet)

x

(Source: FAST Graphs, FactSet)

If VFC grows as anticipated and returns to historic honest worth it might ship 23% annual returns over the subsequent two years.

  • Buffett like-return potential from a blue-chip discount hiding in plain sight

VFC 2027 Consensus Total Return Potential

x

(Source: FAST Graphs, FactSet)

x

(Source: FAST Graphs, FactSet)

If VFC grows as quick as analysts and administration count on then over the subsequent 5 years it might ship practically 150% complete returns or 16% yearly.

  • about 4X the S&P 500 consensus

VFC Investment Decision Score

x

DK

x

(Source: DK Automated Investment Decision Tool)

For anybody snug with its threat profile, VFC is as near an ideal dividend king funding alternative as exists on Wall Street.

  • 24% low cost vs 15% market premium
  • far superior elementary high quality and security
  • 2.5X the a lot safer yield
  • 67% higher long-term return potential than the S&P 500

Investment Strategy Yield LT Consensus Growth LT Consensus Total Return Potential Long-Term Risk-Adjusted Expected Return Long-Term Inflation And Risk-Adjusted Expected Returns Years To Double Your Inflation & Risk-Adjusted Wealth

10 Year Inflation And Risk-Adjusted Return

Adam’s Planned Correction Buys 3.9% 18.9% 22.8% 16.0% 13.5% 5.3 3.54
V.F Corp (Management Guidance) 3.5% 13.0% 16.5% 11.6% 9.1% 7.9 2.38
Nasdaq (Growth) 0.8% 14.3% 15.1% 10.6% 8.1% 8.9 2.17
High-Yield 2.8% 10.3% 13.1% 9.2% 6.7% 10.8 1.91
Dividend Aristocrats 2.2% 8.9% 11.1% 7.8% 5.3% 13.6 1.67
S&P 500 1.4% 8.5% 9.9% 7.0% 4.5% 16.1 1.55

(Source: Morningstar, FactSet, Ycharts)

Management steering is for VFC to ship superior complete returns than nearly each widespread technique on Wall Street.

  • increased yield than Vanguard’s high-yield ETF
  • increased returns potential than the Nasdaq
  • return potential that places the aristocrats to disgrace
  • and runs circles across the Nasdaq

VFC Inflation-Adjusted Total Return Potential: $1,000 Initial Investment

Time Frame (Years) 7.8% CAGR Inflation-Adjusted S&P Consensus 8.9% Inflation-Adjusted Aristocrat Consensus 14.3% CAGR VFC Guidance Difference Between VFC Guidance And S&P
5 $1,453.07 $1,531.58 $1,961.15 $508.07
10 $2,111.43 $2,345.73 $3,846.09 $1,734.66
15 $3,068.06 $3,592.68 $7,542.74 $4,474.68
20 $4,458.12 $5,502.47 $14,792.41 $10,334.29
25 $6,477.98 $8,427.47 $29,010.06 $22,532.08
30 $9,412.99 $12,907.33 $56,892.93 $47,479.94

(Source: DK Research Terminal, FactSet)

If administration can ship its progress steering for a decade that is a possible 4X inflation-adjusted return. If it may ship that progress for 30 years, then VFC is doubtlessly your ticket to a wealthy retirement.

Time Frame (Years) Ratio Aristocrats/S&P Ratio VFC Guidance and S&P
5 1.05 1.35
10 1.11 1.82
15 1.17 2.46
20 1.23 3.32
25 1.30 4.48
30 1.37 6.04

(Source: DK Research Terminal, FactSet)

Long-term we’re speaking concerning the potential to outperform the S&P 500 by 6X whereas having fun with safer, increased, and faster-growing dividends.

Risk Profile: Why V.F Corp Isn’t Right For Everyone

There aren’t any risk-free corporations and no firm is true for everybody. You should be snug with the elemental threat profile.

VFC Risk Profile Includes

  • financial cyclicality threat: gross sales might endure in a recession
  • M&A threat: the lifeblood of the VF’s long-term progress technique
  • margin compression threat: over 1,000 main rivals globally
  • disruption threat from digital commerce: DTC is doing nicely however might endure from wholesale gross sales declines if retail companions shut shops
  • labor retention threat (tightest job market in over 50 years and finance is a excessive paying {industry}) – rising wage pressures
  • forex threat (rising over time attributable to worldwide enlargement)
  • inflation threat: provide chain disruption and better enter prices have lately damage margins
  • shifting shopper style threat: activewear has been purple sizzling (VANs), but when shopper tastes shift then administration progress steering might fall brief

How will we quantify, monitor, and monitor such a fancy threat profile? By doing what massive establishments do.

Material Financial ESG Risk Analysis: How Large Institutions Measure Total Risk

Here is a particular report that outlines an important points of understanding long-term ESG monetary dangers in your investments.

  • ESG is NOT “political or personal ethics based investing”
  • it is complete long-term threat administration evaluation

ESG is simply regular threat by one other identify.” Simon MacMahon, head of ESG and corporate governance research, Sustainalytics” – Morningstar

ESG elements are considered, alongside all different credit score elements, after we contemplate they’re related to and have or could have a cloth affect on creditworthiness.” – S&P

ESG is a measure of risk, not of ethics, political correctness, or personal opinion.

S&P, Fitch, Moody’s, DBRS (Canadian rating agency), AMBest (insurance rating agency), R&I Credit Rating (Japanese rating agency), and the Japan Credit Rating Agency have been using ESG models in their credit ratings for decades.

  • credit and risk management ratings make up 41% of the DK safety and quality model
  • dividend/balance sheet/risk ratings make up 82% of the DK safety and quality model

Dividend Aristocrats: 67th Industry Percentile On Risk Management (Above-Average, Medium Risk)

VFC Long-Term Risk Management Consensus

Rating Agency Industry Percentile

Rating Agency Classification

MSCI 37 Metric Model 82.0%

AA Industry Leader – Stable Trend

Morningstar/Sustainalytics 20 Metric Model 88.8%

12.7/100 Low-Risk

Reuters’/Refinitiv 500+ Metric Model 88.2% Good
S&P 1,000+ Metric Model 28.0%

Average- Stable Trend

Just Capital 19 Metric Model 88.89% Excellent
FactSet 50.0%

Average- Positive Trend

Consensus 71% Good

(Sources: MSCI, Morningstar, Reuters’, Just Capital, S&P, FactSet Research)

VFC Long-Term Risk Management Is The 185th Best In The Master List (63rd Percentile)

  • master list average: 62nd percentile
  • dividend kings: 63rd percentile
  • aristocrats: 67th percentile
  • Ultra SWANs: 71st percentile

VFC’s risk-management consensus is in the bottom top 37% of the world’s highest quality companies and similar to that of such other companies as

  • United Parcel Service (UPS)
  • West Pharmaceutical Services (WST) – dividend champion
  • Ecolab (ECL) – dividend aristocrat
  • Kimberly-Clark (KMB) – dividend aristocrat
  • Alphabet (GOOG)

The bottom line is that all companies have risks, and VFC is good at managing theirs.

How We Monitor VFC’s Risk Profile

  • 25 analysts
  • 2 credit rating agencies
  • 7 total risk rating agencies
  • 32 experts who collectively know this business better than anyone other than management
  • and the bond market for real-time fundamental risk analysis

When the facts change, I change my mind. What do you do sir?” – John Maynard Keynes

There aren’t any sacred cows at iREIT or Dividend Kings. Wherever the basics lead we all the time observe. That’s the essence of disciplined monetary science, the maths behind retiring wealthy and staying wealthy in retirement.

Bottom Line: V.F Corp Is One Of The Best Dividend Aristocrat Bargains You Can Buy

There’s nothing like trusting the world’s finest corporations to realize your long-term monetary targets.

The solely factor higher than that?

  • shopping for low-risk Ultra SWANs
  • which might be dividend kings
  • have an A-credit ranking are rising at 13%
  • and buying and selling at 24% historic reductions
  • 13.8X cash-adjusted earnings
  • and yielding a really secure 3.5%

V.F Corp is a basic Buffett-style “wonderful company” but it surely’s not buying and selling at a good worth, however an exquisite worth.

VFC is an instance of the right way to benefit from the market volatility that causes some to run for the hills.

Today VFC is not simply top-of-the-line high-yield aristocrats you possibly can safely purchase for the long-term, it is top-of-the-line corporations you should buy…interval.

An organization that may enable you make your personal long-term luck on Wall Street and doubtlessly retire in security and splendor.

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