Victoria’s Secret (VSCO): Evaluating Turnaround Valuation Ahead of Earnings and Debt-Focused Investor Scrutiny

Victoria's Secret (VSCO) steps into Friday's earnings with expectations running high after last quarter's revenue beat, as investors weigh whether the retailer can balance growth ambitions against ongoing profitability and debt concerns.

See our latest analysis for Victoria's Secret.

That backdrop has helped fuel a sharp 90 day share price return of 58.36% and a 30 day share price return of 17.53%, even though the 1 year total shareholder return remains slightly negative. This suggests momentum is rebuilding as investors reassess the risk reward trade off.

If Victoria's Secret's rebound has you rethinking retail turnarounds, it could be a good moment to explore fast growing stocks with high insider ownership for other potential opportunities.

With shares still below their one year high, yet trading above analyst targets, the key question now is whether Victoria's Secret remains undervalued or if the recent rally means the market is already pricing in a full turnaround.

Most Popular Narrative: 33.2% Overvalued

Compared with Victoria's Secret's last close of $41.57, the most popular narrative pegs fair value materially lower and frames the current rally as stretched.

The analysts have a consensus price target of $22.7 for Victoria's Secret based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $27.0, and the most bearish reporting a price target of just $17.0.

Read the complete narrative.

Curious why modest revenue growth, thinner margins and a richer future earnings multiple still converge on a much lower fair value than today’s price? The narrative’s math may surprise you.

Result: Fair Value of $31.20 (OVERVALUED)

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

However, persistent tariff headwinds and slower than expected store modernization could quickly erode margins and challenge the optimistic turnaround assumptions underpinning this narrative.

Find out about the key risks to this Victoria's Secret narrative.

Another View on Value

Our SWS DCF model paints a very different picture, suggesting Victoria's Secret is actually trading about 7.9% below its fair value, with an estimated fair value of $45.14 versus the current $41.57. If cash flows say cheap while narratives say rich, which signal do you trust more?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Victoria's Secret for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 908 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Victoria's Secret Narrative

If you see Victoria's Secret differently or want to dig into the numbers yourself, you can build a personalized narrative in minutes: Do it your way.

A great starting point for your Victoria's Secret research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

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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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