BBWI
Bath & Body Works, Inc.
$19.32
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Undervalued
Trading 55.1% below fair value
You pay
$19.32
Bear
$37.62
Fair
$43.00
Bull
$48.37
Bear
$37.62
+94.7%
$3.13 × 14x P/E
Fair
$43.00
+122.6%
$3.13 × 16x P/E
Bull
$48.37
+150.4%
$3.13 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
6.2x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $21.75 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $43.00 per share.
Warnings
Dividend-based valuation: $12.09 (below our primary estimate by 76%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $21.75 (from 22 analysts). Our estimate is 130% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples