Time for my six-month VF update.
I've held on since my alarmed post in early June, when the stock inexplicably bumped over 12. Today, after another great-looking quarterly report, the price is near its high at just under 16.
Trailing quarter-over-quarter top-line growth has been better than you might expect, even during good times. Margins are solid, expenses are moderate, turnover is good, receivables are decreasing moderately. Heck, looks like a well-run cyclical company at the top of the cycle.
If it is the top of a cycle, the stock is too expensive. Trailing PE is around 14. GM, Ford & Chrysler all sport multiples around 9. However, if you think the business cycle has a while to run, or if you believe that VF's cyclicality is moderating, the stock may be fairly priced. If you think both are true, it might even be cheap.
I'm holding on to my VF shares at this price. I believe we're probably past the top of the cycle, but I feel VF (and similar companies) will be less impacted by a downturn than classically is expected. I wouldn't buy if I didn't own any; I think a fair multiple these days is a little lower (12-13, perhaps). However, if it dropped near a Big-Three multiple, in the absence of any news, I'd consider it cheap again.
Good luck,
michael |
