A Look at Bath & Body Works (BBWI) Valuation as Holiday Promotions and New Product Launches Roll Out

Bath & Body Works (BBWI) is raising its game for the holidays, rolling out winter-themed products along with enticing buy one, get one free deals on fan-favorite candles and body care. These timely moves aim to capture shoppers’ attention as Black Friday approaches.

See our latest analysis for Bath & Body Works.

Bath & Body Works’ product launches and fresh leadership moves come at a pivotal time. Despite ramping up its holiday strategy and confirming quarterly dividends, momentum has been elusive for investors. BBWI’s share price is down sharply this year, with a year-to-date decline of nearly 42% and a challenging 1-year total shareholder return of -28%, reflecting both near- and longer-term pressure even as transformation efforts progress.

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With shares trading well below recent analyst price targets and new growth efforts underway, the real question is whether Bath & Body Works represents a bargain at these levels or if the market has already factored in future gains.

Most Popular Narrative: 46% Undervalued

According to user Zwfis, Bath & Body Works is trading at a much lower price than its fair value estimate. With the last close at $22 and a projected fair price of $40.73, the stock’s market value lags behind this optimistic outlook. This creates an opportunity to examine what’s driving such a substantial gap.

However, a big reason the company’s numbers are not as good as they should be is because of the amount of debt they took on after splitting off from Victoria’s Secret. I ran a projection based on equity per share if we were able to take away some of the debt from that split. In doing so, it left a shareholder equity of $10 per share. I felt this was definitely too high, so I only used it to project a rough rate of return on equity.

Read the complete narrative.

Want to know why this stock’s fair value almost doubles its last close? The narrative focuses on debt repayments unlocking significant earnings and a turnaround that few expect. Think you know the key factor behind this substantial price target? Explore which quantitative changes could drive this striking valuation.

Result: Fair Value of $40.73 (UNDERVALUED)

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

However, ongoing debt pressures and slower revenue growth could delay or diminish any turnaround. This may make short-term gains less certain.

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

Build Your Own Bath & Body Works Narrative

If you want to dig into the details yourself, you can explore the numbers and quickly develop your unique perspective 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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