Now trading at a price of $41.95, Bath & Body Works has moved -0.7% so far today.
Bath & Body Works returned gains of 28.6% last year, with its stock price reaching a high of $49.55 and a low of $25.75. Over the same period, the stock outperformed the S&P 500 index by 14.0%. More recently, the company's 50-day average price was $36.0. Bath & Body Works, Inc. operates a specialty retailer of home fragrance, body care, and soaps and sanitizer products. Based in Columbus, OH, the mid-cap Consumer Cyclical company has 8,800 full time employees. Bath & Body Works has offered a 1.9% dividend yield over the last 12 months.
The Company's Revenues Are Declining:
| 2020-01-31 | 2021-01-31 | 2022-01-31 | 2023-01-31 | |
|---|---|---|---|---|
| Revenue (MM) | $12,914 | $11,847 | $7,882 | $7,560 |
| Gross Margins | 34.5% | 39.4% | 48.9% | 43.1% |
| Operating Margins | 7.6% | 13.3% | 25.5% | 18.2% |
| Net Margins | -2.83% | 7.13% | 16.92% | 10.58% |
| Net Income (MM) | -$366 | $844 | $1,333 | $800 |
| Net Interest Expense (MM) | -378 | -438 | -388 | -348 |
| Net Interest Expense (MM) | -$378 | -$438 | -$388 | -$348 |
| Depreciation & Amort. (MM) | -$588 | -$521 | -$363 | -$221 |
| Earnings Per Share | -$1.33 | $3.0 | $4.88 | $3.19 |
| EPS Growth | n/a | 325.56% | 62.67% | -34.63% |
| Diluted Shares (MM) | 278 | 281 | 273 | 229 |
| Free Cash Flow (MM) | $778 | $1,811 | $1,222 | $816 |
| Capital Expenditures (MM) | -$458 | -$228 | -$270 | -$328 |
| Net Current Assets (MM) | -$8,375 | -$6,653 | -$4,534 | -$5,433 |
| Current Ratio | 1.37 | 1.97 | 2.33 | 1.64 |
| Long Term Debt (MM) | $5,487 | $6,366 | $4,854 | $4,862 |
| Net Debt / EBITDA | 5.77 | 1.49 | 1.25 | 2.35 |
Bath & Body Works benefits from exceptional EPS growth, wider gross margins than its peer group, and decent operating margins with a positive growth rate. The company's financial statements show consistent free cash flow and healthy leverage. However, the firm has declining revenues and decreasing reinvestment in the business. Finally, we note that Bath & Body Works has a decent current ratio.
Bath & Body Works Is Reasonably Valued:
Bath & Body Works has a trailing twelve month P/E ratio of 11.3, compared to an average of 22.33 for the Consumer Cyclical sector. Based on its EPS guidance of $3.58, the company has a forward P/E ratio of 10.1. According to the 29.9% compound average growth rate of Bath & Body Works's historical and projected earnings per share, the company's PEG ratio is 0.38. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 10.8%. On this basis, the company's PEG ratio is 1.05. This implies that the shares are fairly valued.
There's an Analyst Consensus of Some Upside Potential for Bath & Body Works:
The 17 analysts following Bath & Body Works have set target prices ranging from $37.0 to $68.0 per share, for an average of $47.76 with a buy rating. As of April 2023, the company is trading -24.6% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Bath & Body Works has an average amount of shares sold short because 4.4% of the company's shares are sold short. Institutions own 97.4% of the company's shares, and the insider ownership rate stands at 2.6%, suggesting a decent amount of insider shareholders. The largest shareholder is the Vanguard Group, Inc., whose 11% stake in the company is worth $1,086,820,324.
