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While Bath & Body Works, Inc. (NYSE:BBWI) might not have the largest market cap around , it saw a decent share price growth of 18% on the NYSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Bath & Body Works’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Is Bath & Body Works Still Cheap?
Great news for investors – Bath & Body Works is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Bath & Body Works’s ratio of 8.06x is below its peer average of 14.51x, which indicates the stock is trading at a lower price compared to the Specialty Retail industry. What’s more interesting is that, Bath & Body Works’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Check out our latest analysis for Bath & Body Works
Can we expect growth from Bath & Body Works?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 3.7% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Bath & Body Works, at least in the short term.
What This Means For You
Are you a shareholder? Even though growth is relatively muted, since BBWI is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.