Stock Analysis

Investors who have held Victoria's Secret (NYSE:VSCO) over the last year have watched its earnings decline along with their investment

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Victoria's Secret & Co. (NYSE:VSCO) shareholders should be happy to see the share price up 27% in the last month. The stock is actually down over the last year. But it did better than its market, which fell 19%.

While the stock has risen 12% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

Our analysis indicates that VSCO is potentially undervalued!

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Unhappily, Victoria's Secret had to report a 35% decline in EPS over the last year. This fall in the EPS is significantly worse than the 15% the share price fall. So the market may not be too worried about the EPS figure, at the moment -- or it may have expected earnings to drop faster.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

NYSE:VSCO Earnings Per Share Growth November 24th 2022

Dive deeper into Victoria's Secret's key metrics by checking this interactive graph of Victoria's Secret's earnings, revenue and cash flow.

A Different Perspective

It's not great that Victoria's Secret shares failed to make money for shareholders in the last year, but the silver lining is that the loss of 15%, wasn't as bad as the broader market loss of about 19%. On the plus side, the share price has bounced a full 26% in the last three months. It could be that the share price dropped so far that the business was cheap on the numbers, but the future will ultimately determine the value of the stock. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 2 warning signs for Victoria's Secret that you should be aware of.

Of course Victoria's Secret may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether Victoria's Secret is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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Victoria's Secret

Victoria's Secret & Co. operates as a specialty retailer of women’s intimate, personal care, and beauty products worldwide.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Future Growth1
Past Performance2
Financial Health3

Read more about these checks in the individual report sections or in our analysis model.

Undervalued with mediocre balance sheet.