June 20, 2024
Top 10 Stock Bath & Body Works Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Bath & Body Works – Top 10 Stock in S&P 500 Consumer Discretionary Index
Bath & Body Works is listed as a top 10 stock on June 20, 2024 in the market index S&P US Luxury because of its high performance in at least one of the Obermatt investment strategies. While only half of the consolidated Obermatt Ranks exhibit above-average performance, the professional market sentiment is positive and it may be a solid investment proposition, especially if a growth recovery is to be expected soon. Based on the Obermatt 360° View of 56 (high 56% performer), Obermatt assesses an overall buy recommendation for Bath & Body Works on June 20, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Specialty Stores |
| Index | Dividends USA, S&P US Luxury, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Bath & Body Works Buy
| 360 METRICS | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 92 |
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| GROWTH | ||||||||
| GROWTH | 25 |
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| SAFETY | ||||||||
| SAFETY | 22 |
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| SENTIMENT | ||||||||
| SENTIMENT | 75 |
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| 360° VIEW | ||||||||
| 360° VIEW | 56 |
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ANALYSIS: With an Obermatt 360° View of 56 (better than 56% compared with alternatives), overall professional sentiment and financial characteristics for the stock Bath & Body Works are above average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Bath & Body Works. The consolidated Value Rank has an attractive rank of 92, which means that the share price of Bath & Body Works is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 92% of alternative stocks in the same industry. The consolidated Sentiment Rank has a good rank of 75, which means that professional investors are more optimistic about the stock than for 75% of alternative investment opportunities. But the consolidated Growth Rank has a low rank of 25, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. The consolidated Safety Rank has a riskier rank of 22, meaning the company has a riskier financing structure than 78 comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 56, Bath & Body Works is better positioned than 56% of all alternative stock investment opportunities based on the Obermatt Method. Half of the consolidated Obermatt Ranks exhibit above-average performance, but the other half are below market levels. The company enjoys a good value (Value Rank of 92) and positive market sentiment in the professional investor community (Sentiment Rank of 75), but growth expectations are below-average (Growth Rank of 25) and the financing structure is on the risky side(Safety Rank of 22). This combination is rather dangerous, because high debt levels (low safety) require growth to finance the debt burden. The current low growth level may be temporary, because professionals are actually optimistic (positive sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. Companies with less growth typically have a lower price than fast-growing competitors. Even though professional investor sentiment is strong, we recommend further evaluating whether the future of Bath & Body Works is as challenging as the stock's low price suggests. Since the professional community is optimistic, the stock might just be going through a more challenging phase now, indicating that timing might be good now. ...read more
Sentiment Strategy: Professional Market Sentiment for Bath & Body Works very positive
ANALYSIS: With an Obermatt Sentiment Rank of 75 (better than 75% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Bath & Body Works is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Bath & Body Works. Analyst Opinions are at a rank of 61 (better than 61% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 62, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in Bath & Body Works. The Professional Investors rank is 70, which means that currently, professional investors hold more stock in this company than in 70% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 83 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 83% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 75 (more positive than 75% compared with investment alternatives), Bath & Body Works has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean Bath & Body Works stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: Bath & Body Works Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 92 (better than 92% compared with alternatives) for 2024, Bath & Body Works shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Bath & Body Works. Price-to-Profit (also referred to as price to earnings, P/E ratio) is 63 which means that the stock price compared with what market professionals expect for future profits is lower than for 63% of comparable companies, indicating a good value concerning Bath & Body Works's profit levels. The same is valid for the expected Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 89, and for Dividend Yield with a Dividend Yield Rank of 79. But, compared with other companies in the same industry, the stock price is higher than average as regards expected revenues; only 66% of all competitors have an even higher stock price as regards to sales revenues (a Price-to-Sales Rank of 34). Profits, the level of invested capital, and dividend policy suggest that this stock is attractively priced. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 92, is a buy recommendation based on Bath & Body Works's stock price compared with the company's operational size and dividend yields. Since it is on the expensive side for Price-to-Sales, it may mean that Bath & Body Works has pricing power in its distribution market because it can charge higher prices than its competitors. If this is the case, all four value indicators are positive signals for purchasing Bath & Body Works shares. ...read more
Growth Strategy: Bath & Body Works Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 25 (better than 25% compared with alternatives), Bath & Body Works shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for Bath & Body Works. Sales Growth has a below market rank of 44, which means that, currently, professionals expect the company to grow less than 56% of its competitors. The same is valid for Capital Growth, with a rank of 26, and Profit Growth, with a rank of 44. Currently, professionals expect the company to grow its profits less than 56% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 63, which means that the stock returns have recently been above 63% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 25, is a hold recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for Bath & Body Works, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: Bath & Body Works Debt Financing Safety risky
| SAFETY METRICS | June 20, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 5 |
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| REFINANCING | ||||||||
| REFINANCING | 47 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 51 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 22 |
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ANALYSIS: With an Obermatt Safety Rank of 22 (better than 22% compared with alternatives), the company Bath & Body Works has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Bath & Body Works is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Bath & Body Works. Liquidity is at 51, meaning the company generates more profit to service its debt than 51% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 47, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 53% of its competitors. Leverage is also high at a rank of 5, which means that the company has an above-average debt-to-equity ratio. It has more debt than 95% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 22 (worse than 78% compared with alternatives), Bath & Body Works has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Bath & Body Works Below-Average Financial Performance
| COMBINED PERFORMANCE | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 92 |
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| GROWTH | ||||||||
| GROWTH | 25 |
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| SAFETY | ||||||||
| SAFETY | 51 |
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| COMBINED | ||||||||
| COMBINED | 45 |
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ANALYSIS: With an Obermatt Combined Rank of 45 (worse than 55% compared with investment alternatives), Bath & Body Works (Specialty Stores, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Bath & Body Works are a good value (attractively priced) with a consolidated Value Rank of 92 (better than 92% of alternatives) but show below-average growth (Growth Rank of 25), and are riskily financed (Safety Rank of 22), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 45, is a hold recommendation based on Bath & Body Works's financial characteristics. As the company Bath & Body Works's key financial metrics exhibit good value (Obermatt Value Rank of 92) but low growth (Obermatt Growth Rank of 25) and risky financing practices (Obermatt Safety Rank of 22), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 92% of comparable companies, may indicate the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity. ...read more
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