Analyst Note| David Swartz |
VF held an analyst event in September 2022 at which it outlined its strategic plan over the next five years. This plan is based on operating more efficiently, investing in its highest-potential opportunities, using data and analytics to meet consumer demand, and offering new products. Despite the optimistic tone of the event, VF’s shares sit at roughly half our $62 fair value estimate after trading at premiums for most of the past five years as we believe investors are overly concerned about near-term issues and are overlooking its history of successful portfolio management and brand development, as well as its potential for sales growth and margin improvement in the medium term. Specifically, we believe the market is expecting five-year annual sales growth and a fiscal 2027 operating margin of 2.7% and 10.7%, respectively, while our estimates are 4.7% and 14.5%.