Back to top

Image: Bigstock

L Brands (LB) Gains But Lags Market: What You Should Know

Read MoreHide Full Article

L Brands closed at $72.27 in the latest trading session, marking a +0.18% move from the prior day. This move lagged the S&P 500's daily gain of 0.33%.

Prior to today's trading, shares of the owner of Victoria's Secret, Bath & Body Works and other chain stores had gained 3.89% over the past month. This has outpaced the Retail-Wholesale sector's gain of 2.53% and the S&P 500's gain of 1.74% in that time.

Investors will be hoping for strength from LB as it approaches its next earnings release. In that report, analysts expect LB to post earnings of $0.99 per share. This would mark year-over-year growth of 296%. Our most recent consensus estimate is calling for quarterly revenue of $3.19 billion, up 37.4% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.79 per share and revenue of $14.41 billion, which would represent changes of +67.34% and +21.61%, respectively, from the prior year.

Any recent changes to analyst estimates for LB should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. LB is currently a Zacks Rank #2 (Buy).

Valuation is also important, so investors should note that LB has a Forward P/E ratio of 12.46 right now. Its industry sports an average Forward P/E of 18.15, so we one might conclude that LB is trading at a discount comparatively.

We can also see that LB currently has a PEG ratio of 0.96. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Retail - Apparel and Shoes stocks are, on average, holding a PEG ratio of 1.57 based on yesterday's closing prices.

The Retail - Apparel and Shoes industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 63, putting it in the top 25% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on

Published in