Earnings Miss: Bath & Body Works, Inc. Missed EPS By 5.1% And Analysts Are Revising Their Forecasts

As you might know, Bath & Body Works, Inc. (NYSE:BBWI) last week released its latest quarterly, and things did not turn out so great for shareholders. Results look to have been somewhat negative - revenue fell 2.4% short of analyst estimates at US$1.6b, and statutory earnings of US$0.37 per share missed forecasts by 5.1%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Bath & Body Works after the latest results.

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After the latest results, the consensus from Bath & Body Works' 14 analysts is for revenues of US$7.08b in 2027, which would reflect a measurable 3.7% decline in revenue compared to the last year of performance. Statutory earnings per share are expected to dip 5.2% to US$3.24 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$7.66b and earnings per share (EPS) of US$3.74 in 2027. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.

View our latest analysis for Bath & Body Works

The consensus price target fell 35% to US$24.25, with the weaker earnings outlook clearly leading valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Bath & Body Works at US$62.00 per share, while the most bearish prices it at US$15.00. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One more thing stood out to us about these estimates, and it's the idea that Bath & Body Works' decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 3.0% to the end of 2027. This tops off a historical decline of 0.2% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.7% per year. So while a broad number of companies are forecast to grow, unfortunately Bath & Body Works is expected to see its revenue affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Bath & Body Works' future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Bath & Body Works going out to 2028, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 3 warning signs for Bath & Body Works (1 can't be ignored!) that you should be aware of.

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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.