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

BATH & BODY WORKS INC (NYSE:BBWI) stands out as a potential opportunity for value investors, according to our fundamental screening criteria. The company combines an attractive valuation with solid profitability and reasonable financial health, making it a candidate for further research.

Valuation

BBWI’s valuation metrics suggest the stock is priced attractively:

• P/E Ratio: At 7.89, it is significantly lower than both the industry average (53.17) and the S&P 500 average (26.46).
• Forward P/E: 6.97, indicating expectations of continued earnings growth.
• Enterprise Value/EBITDA & Price/FCF: Both ratios place BBWI in the cheaper segment of its industry, with 76.67% and 85.83% of peers trading at higher multiples, respectively.

Profitability

The company maintains strong profitability metrics:

• Return on Assets (ROA): 16.72%, outperforming 94.17% of industry peers.
• Return on Invested Capital (ROIC): 29.38%, well above the industry average of 13.34%.
• Operating Margin: 17.53%, ranking in the top 6% of specialty retailers.

Financial Health

BBWI’s financial stability is reasonable, though with some areas to monitor:

• Debt Management: The company has reduced its debt/assets ratio compared to last year.
• Liquidity: A current ratio of 1.41 is adequate, though the quick ratio (0.73) suggests some short-term obligations may require attention.
• Altman-Z Score: 2.58, indicating limited bankruptcy risk but still below the safest threshold.

Growth

While growth is modest, there are positive signs:

• EPS Growth: Expected to increase by 9.63% annually in the coming years.
• Revenue Trends: A slight decline (-0.94%) in the past year, but a 5-year average growth of 6.22% suggests stability.

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

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.