Bath & Body Works (BBWI - Free Report) is a Zacks Rank #5 (Strong Sell) that operates a specialty retailer of home fragrance, body care, and soaps and sanitizer products.
The stock continues to probe the 2022 lows after a recent earnings report that has analysts taking down estimates. With the stock off 45% for the year and 55% from all-time highs, it might be too early to start buying.
About the Company
Bath & Body Works is headquartered in Columbus, Ohio. The company was founded in 1963 and employs over 8,000 people.
The company sells its products under the Bath & Body Works, White Barn, and other brand names through specialty retail stores and websites. The company operates over 1,700 retail stores in the U.S. and Canada, as well as over 300 international partner-operated stores.
BBWI is valued at $8.5 billion and has a Forward PE of 9. The company holds a Zacks Style Score of “A” in Value, but “C” in Growth. The stock pays out a dividend with 2.1% yield.
Q1 Earnings
The company reported EPS in mid-May, seeing a 25% beat on the bottom line. Revenues also cam in above expectations at $1.45B vs the $1.43B expected.
However, fiscal year 2022 guidance was cut from $4.56 to a range of $3.80-4.15. Q2 was also reduced, with the company now seeing $0.60-65 v the $0.65 expected. The FY22 cut shows a big range, which tells investors there is a lot of uncertainty down the road.
Management commented that the business is very strong and they saw positive store transaction trends and engagement. However, they reduced their outlook due to investment into IT, the customer loyalty program and increases in inflationary pressures.
Estimates
The guidance forced analyst to cut estimates across the board.
For the current quarter, estimates have dropped from $0.68 to $0.63, or 7%. For the current year, estimates fell from $4.62 to $4.01, or 13%.
In addition to estimates going lower, analysts are dropping price targets as well. Since the earnings report we have seen the following firms drop their price targets:
JPM Chase: $67 to $63
Credit Suisse: $64 to $49
BMO: $83 to $65
Goldman Sachs: $85 to $61
UBS: $102 to $70
Technical Take
BBWI broke the 200-day moving average the first week of 2022 and hasn’t looked back. The stock is now down about 45% on the year as it trades below all the big moving averages.
The stock is barley off the lows seen in May and if that area was taken out, the stock could fall into the $20s.
Investors looking at the stock should eyeball the $23-27 area, which was the trading range before the pandemic.
In Summary
While the company did perform last quarter, Bed & Body Works has some issues over the short term. Investors should be patient while the company sorts through those issues, especially the inflationary headwinds.
For now, a better retail option might be Ulta Beauty (ULTA). The stock is a Zacks Rank #1 (Strong Buy) and the company is coming off a 42% EPS beat last month.
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Bath & Body Works (BBWI - Free Report) is a Zacks Rank #5 (Strong Sell) that operates a specialty retailer of home fragrance, body care, and soaps and sanitizer products.
The stock continues to probe the 2022 lows after a recent earnings report that has analysts taking down estimates. With the stock off 45% for the year and 55% from all-time highs, it might be too early to start buying.
About the Company
Bath & Body Works is headquartered in Columbus, Ohio. The company was founded in 1963 and employs over 8,000 people.
The company sells its products under the Bath & Body Works, White Barn, and other brand names through specialty retail stores and websites. The company operates over 1,700 retail stores in the U.S. and Canada, as well as over 300 international partner-operated stores.
BBWI is valued at $8.5 billion and has a Forward PE of 9. The company holds a Zacks Style Score of “A” in Value, but “C” in Growth. The stock pays out a dividend with 2.1% yield.
Q1 Earnings
The company reported EPS in mid-May, seeing a 25% beat on the bottom line. Revenues also cam in above expectations at $1.45B vs the $1.43B expected.
However, fiscal year 2022 guidance was cut from $4.56 to a range of $3.80-4.15. Q2 was also reduced, with the company now seeing $0.60-65 v the $0.65 expected. The FY22 cut shows a big range, which tells investors there is a lot of uncertainty down the road.
Management commented that the business is very strong and they saw positive store transaction trends and engagement. However, they reduced their outlook due to investment into IT, the customer loyalty program and increases in inflationary pressures.
Estimates
The guidance forced analyst to cut estimates across the board.
For the current quarter, estimates have dropped from $0.68 to $0.63, or 7%. For the current year, estimates fell from $4.62 to $4.01, or 13%.
In addition to estimates going lower, analysts are dropping price targets as well. Since the earnings report we have seen the following firms drop their price targets:
JPM Chase: $67 to $63
Credit Suisse: $64 to $49
BMO: $83 to $65
Goldman Sachs: $85 to $61
UBS: $102 to $70
Technical Take
BBWI broke the 200-day moving average the first week of 2022 and hasn’t looked back. The stock is now down about 45% on the year as it trades below all the big moving averages.
The stock is barley off the lows seen in May and if that area was taken out, the stock could fall into the $20s.
Investors looking at the stock should eyeball the $23-27 area, which was the trading range before the pandemic.
In Summary
While the company did perform last quarter, Bed & Body Works has some issues over the short term. Investors should be patient while the company sorts through those issues, especially the inflationary headwinds.
For now, a better retail option might be Ulta Beauty (ULTA). The stock is a Zacks Rank #1 (Strong Buy) and the company is coming off a 42% EPS beat last month.
Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry
Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in? If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.
>>Send me my free report on the top 5 EV stocks<<
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