Bath & Body Works, Inc. - NYSE:BBWI - Comprehensive analysis
We find the shares of Bath & Body Works to be attractive, currently trading at approximately a 50% discount to our fair value estimate of $63. The company possesses a strong competitive advantage in the substantial addressable markets it serves. Its robust brand intangible asset is reinforced by its leading position in the bath and shower, as well as the candle and air freshener sectors, which has been enhanced by a swift adaptation to consumer trends. The company's narrow moat is reflected in the anticipated 37% average return on invested capital, excluding goodwill, over the next decade, significantly surpassing our 8% weighted average cost of capital estimate. While we project limited growth in its North American footprint, with nearly 1,900 owned stores already established, we believe that product innovation and productivity improvements from evolving store formats will drive both top- and bottom-line growth over time. Additionally, advancements in omnichannel strategies, such as buy online/pick up in store, are expected to remain a key component, alongside loyalty program enhancements that will boost conversion rates and profit potential. The emphasis on international expansion is likely to benefit both physical and digital sales channels, projecting an average international sales growth of 7% over the next decade, which will help Bath & Body Works enhance its brand intangible asset on a global scale. We anticipate that these opportunities will contribute to an average sales growth of 3% in the long term, aligning with global growth forecasts (according to Euromonitor) for the bath and shower and soap industries. This trajectory will enable Bath & Body Works to gain additional market share, further solidifying its already dominant position.
Free evaluation through quantitative algorithms Bath & Body Works, Inc. - NYSE:BBWI
Growth-Scoring Model Detail
Total Revenue Growth Over Prior Year | -0.94 | Market 18 Sector 38 |
Gross Profit Growth Over Prior Year | 0.86 | Market 27 Sector 44 |
EBITDA Growth Over Prior Year | -0.32 | Market 25 Sector 43 |
EBITA Growth Over Prior Year | -0.23 | Market 28 Sector 47 |
EBIT Growth Over Prior Year | -0.23 | Market 30 Sector 48 |
Earnings from Cont. Ops. Growth Over Prior Year | -7.69 | Market 30 Sector 38 |
Net Income Growth Over Prior Year | -7.69 | Market 31 Sector 40 |
Normalized Net Income Growth Over Prior Year | 1.68 | Market 37 Sector 51 |
Diluted EPS before Extra Growth Over Prior Year | -3.5 | Market 33 Sector 41 |
A/R Growth Over Prior Year | -14.88 | Market 6 Sector 17 |
Inventory Growth Over Prior Year | 6.76 | Market 79 Sector 72 |
PPE Net Growth Over Prior Year | -6.68 | Market 9 Sector 27 |
Total Assets Growth Over Prior Year | -6.51 | Market 9 Sector 25 |
Tangible Book Value Growth Over Prior Year | 0 | Market 0 Sector 0 |
Common Equity Growth Over Prior Year | 0 | Market 0 Sector 0 |
Cash from Ops. Growth Over Prior Year | 1.22 | Market 45 Sector 59 |
CAPEX Growth Over Prior Year | -13.55 | Market 21 Sector 35 |
Dividend per Share Growth Over Prior Year | 0 | Market 36 Sector 43 |
Levered Free Cash Flow Growth Over Prior Year | 14.92 | Market 64 Sector 70 |
Unlevered Free Cash Flow Growth Over Prior Year | 7.88 | Market 54 Sector 64 |
Profitability-Scoring Model Detail
Gross Margin % | 44.6 | Market 52 Sector 63 |
SG&A Margin % | 27 | Market 78 Sector 52 |
EBITDA Margin % | 21.3 | Market 41 Sector 81 |
EBITA Margin % | 17.53 | Market 42 Sector 82 |
EBIT Margin % | 17.53 | Market 45 Sector 84 |
Earnings from Cont. Ops Margin % | 11.11 | Market 42 Sector 82 |
Net Income Margin % | 11.11 | Market 42 Sector 83 |
Net Income Avail. for Common Margin % | 11.11 | Market 43 Sector 83 |
Normalized Net Income Margin % | 8.73 | Market 39 Sector 83 |
Levered Free Cash Flow Margin % | 8.83 | Market 44 Sector 77 |
Unlevered Free Cash Flow Margin % | 11.39 | Market 48 Sector 78 |
Return on Assets % | 15.94 | Market 94 Sector 98 |
Return on Capital % | 22 | Market 92 Sector 97 |
Return on Equity % | 0 | Market 0 Sector 0 |
Return on Common Equity % | 0 | Market 0 Sector 0 |
Total Asset Turnover | 1.45 | Market 93 Sector 80 |
