V.F. Corporation (NYSE: VFC) and Ralph Lauren Corporation (NYSE:RL) are both mid-cap consumer discretionary companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, analyst recommendations, valuation, profitabiliy, risk and institutional ownership.

Dividends

V.F. Corporation pays an annual dividend of $1.68 per share and has a dividend yield of 3.0%. Ralph Lauren Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.8%. V.F. Corporation pays out 68.9% of its earnings in the form of a dividend. Ralph Lauren Corporation pays out -163.9% 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 raised its dividend for 44 consecutive years and Ralph Lauren Corporation has raised its dividend for 5 consecutive years. V.F. Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
V.F. Corporation 8.67% 26.78% 12.90%
Ralph Lauren Corporation -1.49% 13.57% 8.02%

Volatility and Risk

V.F. Corporation has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Ralph Lauren Corporation has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500.

Insider & Institutional Ownership

91.0% of V.F. Corporation shares are owned by institutional investors. Comparatively, 58.1% of Ralph Lauren Corporation shares are owned by institutional investors. 1.6% of V.F. Corporation shares are owned by company insiders. Comparatively, 32.4% of Ralph Lauren Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares V.F. Corporation and Ralph Lauren Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
V.F. Corporation $11.97 billion 1.89 $1.90 billion $2.44 23.15
Ralph Lauren Corporation $6.65 billion 0.88 $983.00 million ($1.22) -59.08

V.F. Corporation has higher revenue and earnings than Ralph Lauren Corporation. Ralph Lauren Corporation 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.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for V.F. Corporation and Ralph Lauren Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
V.F. Corporation 2 16 2 0 2.00
Ralph Lauren Corporation 2 13 3 0 2.06

V.F. Corporation presently has a consensus target price of $56.06, suggesting a potential downside of 0.76%. Ralph Lauren Corporation has a consensus target price of $86.23, suggesting a potential upside of 19.63%. Given Ralph Lauren Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Ralph Lauren Corporation is more favorable than V.F. Corporation.

Summary

V.F. Corporation beats Ralph Lauren Corporation on 12 of the 17 factors compared between the two stocks.

V.F. Corporation Company Profile

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).

Ralph Lauren Corporation Company Profile

Ralph Lauren Corporation is engaged in the design, marketing and distribution of lifestyle products, including apparel, accessories, home furnishings and other licensed product categories. The Company operates through three segments: Wholesale, Retail and Licensing. Wholesale business consists of sales made to department stores and specialty stores around the world. Retail business consists of sales made directly to consumers through retail channel, which includes Company’s’ retail stores, concession-based shop-within-shops and e-commerce operations around the world. Licensing business consists of royalty-based arrangements, under which the Company licenses to unrelated third parties for specified periods the right to operate retail stores and/or to use its various trademarks in connection with the manufacture and sale of designated products, such as certain apparel, eyewear, fragrances and home furnishings.

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