A Look at Bath & Body Works (BBWI) Valuation After Third Quarter Earnings and 2025 Guidance Cut

Bath & Body Works (BBWI) issued its third quarter earnings and updated its 2025 outlook, revealing declines in both sales and net income compared to last year. The updated guidance pointed to softer sales and profits ahead.

See our latest analysis for Bath & Body Works.

The latest quarter’s muted results and downward revision to full-year sales guidance have weighed heavily on sentiment, with the stock’s share price return slipping 33.3% over the past month and 54.2% year-to-date. Long-term momentum has faded as well, reflected in a one-year total shareholder return of -50%. This suggests persistent headwinds despite a resilient brand and loyal customer base.

If you’re looking beyond retail for new opportunities, now’s an ideal moment to expand your search and discover fast growing stocks with high insider ownership

Given this recent performance, is Bath & Body Works now trading at an attractive discount? Or is the market already factoring in the company’s slower growth prospects and ongoing challenges?

Most Popular Narrative: 57% Undervalued

The current fair value set by the most-followed Bath & Body Works narrative is more than double the last close, with a $40.73 one-year projection compared to the current $17.37. The stage is set by a bold outlook, but it hinges on a few essential shifts at the company.

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.

Curious how such an aggressive upside was calculated? The narrative’s projections rely on key financial improvements, bold management actions, and untapped markets. Wondering which assumptions fuel the bullish scenario, and where the biggest upside surprises might come from? Click through to see how this high-conviction valuation is built and what could make those numbers a reality.

Result: Fair Value of $40.73 (UNDERVALUED)

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

However, persistent debt levels or stagnant expansion into new markets could quickly undermine this optimistic scenario for Bath & Body Works.

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

Build Your Own Bath & Body Works Narrative

If you have a different perspective or want to back your own insights with real numbers, you can build a custom 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.

Looking for More Smart Investment Angles?

Make your next financial move count by targeting sectors brimming with fresh momentum and real opportunity. Don't let the market’s best ideas pass you by. Set your sights on what’s coming next.

• Access steady income potential and growing yields when you tap into these 15 dividend stocks with yields > 3%, perfect for long-term wealth builders.
• Uncover cutting-edge breakthroughs by checking out these 30 healthcare AI stocks where AI is transforming the healthcare landscape with innovation and real-world impact.
• Ride the future of payments and digital assets by getting ahead with these 82 cryptocurrency and blockchain stocks, where blockchain and crypto technologies shape tomorrow’s markets.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com