A Fresh Look at Bath & Body Works (BBWI) Valuation After Strategic Overhaul and Buyback Moves

Bath & Body Works (BBWI) is making headlines as the retailer rolls out significant operational shifts under a new CEO. With a renewed focus on digital sales, customer loyalty, and share buybacks, the company is taking decisive steps to chart its next chapter.

See our latest analysis for Bath & Body Works.

While Bath & Body Works’ shake-up under new leadership is creating buzz, recent momentum in the shares has been mixed. The stock has rebounded over 4% in the last week after hitting fresh lows for the year. However, the year-to-date share price return is still down nearly 29%. Over the past five years, its total shareholder return is near 11%, suggesting the bigger picture is about gradual improvement with some volatility along the way.

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With shares still trading well below analyst price targets, and ongoing operational changes underway, is the market overlooking the upside in Bath & Body Works? Alternatively, have all these improvements already been fully factored into the price?

Most Popular Narrative: 33.6% Undervalued

Bath & Body Works is pegged at a much higher fair value compared to the latest close, according to the most-followed narrative. That view suggests the current share price is not giving enough credit for the company’s future growth and operating leverage.

The first thing is they need to get through their mountain of debt. Once they can get through this debt then their earnings growth is going to start growing like crazy and become more productive. This will not help with their low revenue growth, but it will show a significant amount of more FCF and just make the company more sound. Especially with how much revenue they are already bringing in.

Read the complete narrative.

Wondering what ambitious assumptions drive this bullish outlook? There is a sharp focus on unlocking earnings power by tackling legacy debt, while targeting new demographics and international markets. Which financial leap propels the fair value skyward? Dive into the full narrative for all the revealing forecasts and surprising strategies that set this price target apart.

Result: Fair Value of $40.73 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent high debt levels or a failure to win over new international or male customers could quickly unravel the optimistic projections that are driving this narrative.

Find out about the key risks to this Bath & Body Works narrative.

Build Your Own Bath & Body Works Narrative

If you think there’s more to the story or want to dig into the numbers yourself, you can piece together your own narrative in just a few minutes: Do it your way

A great starting point for your Bath & Body Works research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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