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

BATH & BODY WORKS INC (NYSE:BBWI) was flagged by our stock screener as a decent value candidate. The company, known for its fragrances and personal care products, shows a combination of reasonable valuation, solid profitability, and stable financial health, making it worth a closer look for value-oriented investors.

Valuation

BBWI appears attractively priced with a Price/Earnings (P/E) ratio of 9.22, well below both the industry average (53.81) and the S&P500 average (27.48). The Forward P/E of 8.24 further supports the case for undervaluation, with 88.5% of industry peers trading at higher multiples. The Enterprise Value to EBITDA ratio also suggests BBWI is cheaper than 77.9% of competitors.

Profitability

The company earns a Profitability Rating of 7/10, driven by strong margins:

• Return on Assets (ROA) of 16.72% (top 6% of industry)
• Return on Invested Capital (ROIC) of 29.38% (top 5% of industry)
• Operating Margin of 17.53% (outperforming 94% of peers)
  While margins have seen slight declines recently, they remain well above industry norms.

Financial Health

BBWI’s Health Rating of 5/10 reflects a mixed but manageable position:

• Altman-Z score of 2.67 (above 60% of peers, though still in a cautionary range)
• Debt/FCF ratio of 4.98 (better than 66% of industry)
• Share count has decreased over the past 1 and 5 years, a positive signal.

Growth

Growth is modest but stable, with a Growth Rating of 4/10:

• EPS growth expected at 9.63% annually over the next few years
• Revenue growth has slowed (-0.94% YoY), but long-term trends remain positive.

BBWI also offers a dividend yield of 2.38%, slightly above the S&P500 average, though payouts have declined by 7.77% annually over time.

For a deeper dive, review the full fundamental analysis of BBWI.

Our Decent Value screener lists more stocks with similar characteristics and is updated daily.

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.