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Investing.com - VF Corp. (NYSE:VFC), currently valued at $5.8 billion in market capitalization with annual revenue of $9.5 billion, will sell its Dickies brand for $600 million, a move that helps address near-term debt concerns but doesn’t fully resolve the company’s balance sheet challenges, according to Evercore ISI. InvestingPro analysis indicates the stock is currently undervalued, with additional metrics suggesting potential growth ahead.
Evercore ISI maintained its "In Line" rating and $15.00 price target on VF Corp. following the announcement. The firm noted that while the sale provides clarity on how VF Corp. will fund its approximately $500 million debt maturity in March 2026, the company’s overall balance sheet remains a primary concern, with InvestingPro data showing a debt-to-equity ratio of 4.39x and an Altman Z-Score of 1.74.
The transaction would only modestly improve VF Corp.’s financial leverage, with Evercore estimating that net debt to EBITDA would improve to approximately 5.4x from 5.8x as of the first quarter of fiscal 2026. While the company maintains a FAIR financial health score according to InvestingPro analysis, with EBITDA of $771 million in the last twelve months, the firm cautioned that VF Corp.’s financial model remains sensitive to macroeconomic deterioration given its ongoing debt levels.
Evercore reported strong performance in its checks on the Timberland brand for winter, while The North Face brand checks were described as "more mixed but solid overall." However, the firm has yet to see signs of improvement in the Vans brand, which it considers crucial for VF Corp. to address its ongoing debt obligations.
The research firm characterized the Dickies sale as "a good headline" that doesn’t significantly alter VF Corp.’s overall financial picture, with the company still facing the challenge of covering debt payments exceeding $500 million due in each of the next five years.
In other recent news, VF Corp. announced a definitive agreement to sell its Dickies brand to Blue Star Alliance for $600 million in cash. This transaction is expected to close by the end of 2025 and aims to reduce VF Corp’s debt levels, potentially boosting growth on a pro-forma basis, according to the company’s President and CEO, Bracken Darrell. Analyst firm Baird upgraded VF Corp’s stock from Neutral to Outperform, citing potential improvements in the Vans brand’s financial performance and increased consumer interest. However, BNP Paribas Exane downgraded VF Corp. from Neutral to Underperform, expressing concerns over slowing performance in The North Face and Timberland brands. Williams Trading has maintained a Sell rating on VF Corp., with a price target of $10.00, following the Dickies brand sale announcement. Additionally, Matt Puckett, former CFO of VF Corp., has been appointed as the Chief Financial Officer of Ibotta, Inc. These recent developments highlight both strategic moves and challenges faced by VF Corp.
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