Wacoal (OTCMKTS:WACLY) & V.F. (NYSE:VFC) Critical Review

Wacoal (OTCMKTS:WACLY) and V.F. (NYSE:VFC) are both consumer discretionary companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Volatility and Risk

Wacoal has a beta of 0.06, indicating that its stock price is 94% less volatile than the S&P 500. Comparatively, V.F. has a beta of 1.57, indicating that its stock price is 57% more volatile than the S&P 500.

Institutional and Insider Ownership

86.8% of V.F. shares are owned by institutional investors. 0.8% of Wacoal shares are owned by company insiders. Comparatively, 1.1% of V.F. shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and price targets for Wacoal and V.F., as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wacoal	0	0	0	0	0.00
V.F.	2	13	4	2	2.29

V.F. has a consensus price target of $18.58, indicating a potential upside of 12.02%. Given V.F.’s stronger consensus rating and higher probable upside, analysts clearly believe V.F. is more favorable than Wacoal.

Profitability

This table compares Wacoal and V.F.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wacoal	7.87%	6.55%	4.73%
V.F.	2.65%	21.05%	3.33%

Dividends

Wacoal pays an annual dividend of $1.26 per share and has a dividend yield of 0.9%. V.F. pays an annual dividend of $0.36 per share and has a dividend yield of 2.2%. Wacoal pays out 14.0% of its earnings in the form of a dividend. V.F. pays out 56.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Earnings & Valuation

This table compares Wacoal and V.F.”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wacoal	$1.14 billion	1.22	$87.18 million	$9.00	14.75
V.F.	$9.61 billion	0.68	$254.92 million	$0.64	25.92

V.F. has higher revenue and earnings than Wacoal. Wacoal is trading at a lower price-to-earnings ratio than V.F., indicating that it is currently the more affordable of the two stocks.

Summary

V.F. beats Wacoal on 12 of the 17 factors compared between the two stocks.

About Wacoal

Wacoal Holdings Corp. engages in the manufacturing, wholesale, and retail sale of intimate apparel, outerwear, sportswear, and other textile products and accessories in Japan, Asia, Oceania, the United States, and Europe. The company operates through Wacoal Business (Domestic), Wacoal Business (Overseas), Peach John Business, and Other Businesses segments. It offers intimate apparel mainly women’s foundation wear, lingerie, nightwear and children’s underwear; and outerwear, sportswear, and other textile products and accessories. The company also engages in the restaurant, cultural and service-related businesses; and manufacture and sale of mannequins and fixtures, interior design work, and other textile-related businesses. It offers products through department stores, general merchandisers, and other general retailers in Japan, as well as directly managed retail stores, E-commerce websites, and distributors in Japan and internationally. Wacoal Holdings Corp. was founded in 1946 and is headquartered in Kyoto, Japan.

About V.F.

VF Corp. engages in the business of producing and marketing apparel, footwear, and accessories. It operates through the following segments: Outdoor, Active, Work, and Other. The Outdoor segment includes authentic outdoor-based lifestyle brands such as performance-based and outdoor apparel, footwear, and equipment. The Active segment focuses on activity-based lifestyle brands including active apparel, footwear, backpacks, luggage, and accessories. The Work segment offers work and work-inspired lifestyle brands with product offerings including apparel, footwear, and accessories. The Other segment refers to the sale of non-VF products and sourcing activities related to transition services. The company was founded by John Barbey in October 1899 and is headquartered in Denver, CO.