V.F. Corporation (NYSE: VFC) and Hanesbrands (NYSE:HBI) are both mid-cap consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Institutional and Insider Ownership

94.3% of Hanesbrands shares are held by institutional investors. 1.6% of V.F. Corporation shares are held by insiders. Comparatively, 1.1% of Hanesbrands shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for V.F. Corporation and Hanesbrands, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
V.F. Corporation 1 15 4 0 2.15
Hanesbrands 0 6 8 0 2.57

V.F. Corporation currently has a consensus target price of $61.12, suggesting a potential downside of 5.84%. Hanesbrands has a consensus target price of $27.38, suggesting a potential upside of 15.45%. Given Hanesbrands’ stronger consensus rating and higher possible upside, analysts clearly believe Hanesbrands is more favorable than V.F. Corporation.

Profitability

This table compares V.F. Corporation and Hanesbrands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
V.F. Corporation 9.23% 27.44% 12.68%
Hanesbrands 9.02% 64.80% 10.11%

Earnings & Valuation

This table compares V.F. Corporation and Hanesbrands’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
V.F. Corporation $12.01 billion 2.13 $1.87 billion $2.59 25.06
Hanesbrands $6.36 billion 1.36 $1.05 billion $1.52 15.61

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

Volatility and Risk

V.F. Corporation has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, Hanesbrands has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Dividends

V.F. Corporation pays an annual dividend of $1.68 per share and has a dividend yield of 2.6%. Hanesbrands pays an annual dividend of $0.60 per share and has a dividend yield of 2.5%. V.F. Corporation pays out 64.9% of its earnings in the form of a dividend. Hanesbrands pays out 39.5% 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. V.F. Corporation has increased its dividend for 3 consecutive years and Hanesbrands has increased its dividend for 44 consecutive years.

Summary

V.F. Corporation beats Hanesbrands on 10 of the 17 factors compared between the two stocks.

About V.F. Corporation

V.F. Corporation (VF) is engaged in the design, production, procurement, marketing and distribution of branded lifestyle apparel, footwear and related products. The Company’s segments include Outdoor & Action Sports, Jeanswear, Imagewear and Sportswear. Its Outdoor & Action Sports Coalition is a group of authentic outdoor and activity-based lifestyle brands. Its product offerings include apparel, footwear, equipment, backpacks, luggage and accessories. Its Imagewear coalition consists of the Image business. Its Wrangler brand offers denim, apparel, accessories and footwear through mass merchants, specialty stores and department stores in the United States, VF-operated stores and online at www.wrangler.com. The Sportswear coalition consists of the Nautica and Kipling brand businesses in North America (the Kipling brand outside of North America is managed by the Outdoor & Action Sports coalition).

About Hanesbrands

Hanesbrands Inc. is a marketer of basic innerwear and activewear apparel in the Americas, Europe, Australia and Asia/Pacific under apparel brands, such as Hanes, Champion, Maidenform, DIM, Bali, Playtex, Bonds, JMS/Just My Size, Nur Die/Nur Der, L’eggs, Lovable, Wonderbra, Flexees, Gear for Sports and Berlei. The Company operates through four segments: Innerwear, Activewear, Direct to Consumer and International. The Innerwear segment focuses on core apparel products, such as intimate apparel, men’s underwear, women’s panties, children’s underwear, socks and hosiery. The Company operates in the activewear market through its Champion, Hanes and JMS/Just My Size brands. The Direct to Consumer segment operations include its domestic Company-operated outlet stores and Website operations that sell its branded products directly to consumers in the United States. The International segment includes products that primarily span across the innerwear and activewear segments.

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