Bath & Body Works, Inc. (BBWI) stock analysis

P/E below its 5-year median

Bath & Body Works's P/E of 5.6 is below its own 5-year median of 8.9.

P/E below the industry

Bath & Body Works's P/E of 5.6 is below the Miscellaneous Retail median of 17.9.

EV/EBITDA below its 5-year median

Bath & Body Works's EV/EBITDA of 6.0 is below its 5-year median of 8.1.

P/S above the industry

Bath & Body Works's price-to-sales of 0.61 is above the Miscellaneous Retail median of 0.24 (book value is negative, so we use sales).

Trading below fair value

The share price of $21.65 is below our fair value estimate of $44.68.

Margin of safety over 20%

The price is 51.5% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -1.2% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -3.2% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 7.3% over the last twelve months, against a 5-year average of -5.1% a year.

Growing slower than the industry

Revenue grew -2.2% over the last twelve months; the Miscellaneous Retail median is 2.6%.

Guidance raised

Bath & Body Works raised its full-year 2026 net sales outlook on Aug 26, 2026.

Gross margin slipping

Gross margin was 44.1% over the last twelve months, against 44.6% a year earlier.

Return on equity

Needs positive equity and five years of results.

Return on capital over 10%

Return on invested capital was 51.9%, above the 10% that usually covers the cost of capital.

Return on equity against the industry

Needs positive equity.

Earnings shrank over 5 years

Net income shrank 5.1% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 10.8% over the last twelve months, against a 5-year average of 11.8%.

Net margin above the industry

Bath & Body Works's net margin of 10.8% is above the Miscellaneous Retail median of -2.5%.

Debt level

Needs debt and equity figures.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 35.2% of total debt.

Interest not well covered

Operating income covers interest expense 4.5 times; we look for at least 5.

Short-term assets cover short-term debts

Current assets are 1.20 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.34; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Bath & Body Works paid dividends worth 3.7% of the share price over the last twelve months.

Yield below Treasuries

The 3.7% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Bath & Body Works yields 3.7%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 20.7% of net income.

Covered by free cash flow

Dividends take 15.7% of free cash flow.