BATH & BODY WORKS INC (NYSE:BBWI) – A Potentially Undervalued Stock Worth Considering

BATH & BODY WORKS INC (NYSE:BBWI) was identified by our stock screener as a decent value candidate, offering a combination of reasonable valuation, solid profitability, and manageable financial health. The company operates as a specialty retailer, known for its fragrances and personal care products, and appears to trade below its intrinsic value based on key financial metrics.

Valuation

BBWI stands out with a Valuation Rating of 8/10, indicating it may be priced attractively compared to peers. Key points include:

• P/E Ratio of 10.11, well below the industry average of 55.28 and the S&P 500 average of 24.95.
• Forward P/E of 9.34, suggesting continued reasonable pricing.
• Price/Free Cash Flow is lower than 81% of industry peers, reinforcing its undervaluation.

Profitability

The company earns a Profitability Rating of 7/10, supported by strong margins and returns:

• Return on Invested Capital (ROIC) of 28.45%, outperforming 95% of competitors.
• Operating Margin of 17.33%, ranking among the top in its sector.
• Consistent profitability over the past five years, with positive earnings and cash flow.

Financial Health

BBWI’s Health Rating of 5/10 suggests moderate financial stability:

• Debt reduction compared to prior years, improving solvency.
• Current Ratio of 1.48, indicating sufficient liquidity for short-term obligations.
• Altman-Z Score of 2.73, placing it in a stable but cautious zone regarding bankruptcy risk.

Growth

While growth is modest, BBWI maintains a Growth Rating of 4/10:

• Expected EPS growth of 9.76% annually, signaling improving profitability.
• Revenue growth has slowed, but cost management and efficiency could support future earnings.

Our Decent Value Stocks screener lists more stocks with similar characteristics and is updated regularly.
For a deeper look, review the full fundamental report on BBWI.

Disclaimer

This is not investment advice. The observations here are based on available data at the time of writing. Always conduct your own research before making investment decisions.