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Does VSCO's Low P/E Make It a Smart Investment or Risky Play?
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Victoria’s Secret & Co. (VSCO - Free Report) is currently trading at a compelling discount than its industry peers. With a forward 12-month Price/Earnings ratio of 11.76X, the stock is priced significantly below the industry average of 29.16X and the broader Consumer Discretionary sector’s 18.43X, presenting a potential value opportunity.
In the past three months, VSCO has delivered an impressive 30.9% gain, outpacing the industry’s 22.8% increase and the S&P 500’s 1.4% rise. The company has also outperformed other industry players like American Eagle Outfitters’ (AEO - Free Report) 4.4% growth, Nordstrom’s (JWN - Free Report) 0.4% gain and Capri Holdings’ (CPRI - Free Report) 25% jump, making the competition fierce.
Stock Price Performance
Image Source: Zacks Investment Research
From a technical standpoint, VSCO shows continued strength, trading above its 50-day moving average — a key indicator of upward momentum and price stability. This technical resilience reflects growing investor confidence in Victoria's Secret’s financial prospects and long-term growth potential.
50-Day Moving Average
Image Source: Zacks Investment Research
Leadership Change Creates Optimism for Growth
Victoria's Secret is set for a potential turnaround under its newly appointed CEO, Hillary Super, who previously led Savage X Fenty and served as Global CEO of Anthropologie Group, and aims to steer the company toward renewed growth. With a focus on modernizing the brand's image and expanding its digital footprint, the leadership change signals a fresh direction for the lingerie giant.
Investors hope the new CEO’s vision will revitalize sales and enhance profitability, particularly through product innovation and a stronger connection with evolving consumer trends. This leadership shift could be the catalyst that VSCO needs to regain its competitive edge in the retail market.
Sales Improvement & Product Innovation to Aid VSCO
The company is benefiting from improving sales trends in North America, which improved for the fourth consecutive quarter. Strong performance across both physical stores and digital channels is aiding the company. The launch of the Victoria's Secret Dream bra collection and the PINK Friday event helped drive sales momentum, especially in July.
The company is optimistic about its North America business, as it has seen continued improvement in trends through August and into the beginning of the third quarter. Encouraging early feedback on fall assortments for Victoria’s Secret and PINK brands bodes well.
The introduction of innovative products, including the Featherweight Max front-close bra and the Tease Sugar Fleur beauty collection, bodes well for the company. The beauty category, in particular, remained the best-performing segment, showing year-over-year growth for the fourth straight quarter.
Robust Traffic Aiding VSCO
An increase in store and digital traffic, with store traffic outperforming mall averages and strong customer response to new merchandise, is also contributing to the company’s performance. In second-quarter fiscal 2024, the digital market share increased in bras and panties, and overall sports bra market share improved for the second consecutive quarter.
High-single-digit sales growth in the International business and Adore Me, driven by franchise and travel retail partners, and strong performance in the U.K. in the recently concluded quarter.
VSCO Guidance Boosts Confidence
Victoria's Secret raised its 2024 forecast, expecting sales to be down just 1% from the prior mentioned low-single-digit decline. The company is optimistic about continued sales improvement in North America and sustained international growth.
With the revised sales forecast, VSCO expects adjusted operating income for 2024 between $275 million and $300 million, up from the prior mentioned $250-$275 million. The company projects adjusted free cash flow of $200-$225 million, marking an increase from the earlier stated $175-$200 million. For the third quarter of 2024, sales are expected to rise year over year in the low-single digits.
Is it Worth Buying VSCO Stock Now?
VSCO is benefiting from positive sales momentum in North America, product innovation, and increasing store and digital traffic. The leadership change under CEO Hillary Super adds optimism for growth through brand modernization and digital expansion.
Then again, earnings estimates have been revised upward, reflecting optimism about the company’s growth. Over the past 60 days, analysts have raised their estimates for the current and next fiscal years by 14.5% to $1.98 per share and 13.2% to $2.14, respectively.
Image Source: Zacks Investment Research
The company presents a compelling investment opportunity, reflected in its recent share performance and upward earnings estimate revisions. Its low P/E indicates that this is the right time to invest in the stock. VSCO currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Does VSCO's Low P/E Make It a Smart Investment or Risky Play?
Victoria’s Secret & Co. (VSCO - Free Report) is currently trading at a compelling discount than its industry peers. With a forward 12-month Price/Earnings ratio of 11.76X, the stock is priced significantly below the industry average of 29.16X and the broader Consumer Discretionary sector’s 18.43X, presenting a potential value opportunity.
In the past three months, VSCO has delivered an impressive 30.9% gain, outpacing the industry’s 22.8% increase and the S&P 500’s 1.4% rise. The company has also outperformed other industry players like American Eagle Outfitters’ (AEO - Free Report) 4.4% growth, Nordstrom’s (JWN - Free Report) 0.4% gain and Capri Holdings’ (CPRI - Free Report) 25% jump, making the competition fierce.
Stock Price Performance
Image Source: Zacks Investment Research
From a technical standpoint, VSCO shows continued strength, trading above its 50-day moving average — a key indicator of upward momentum and price stability. This technical resilience reflects growing investor confidence in Victoria's Secret’s financial prospects and long-term growth potential.
50-Day Moving Average
Image Source: Zacks Investment Research
Leadership Change Creates Optimism for Growth
Victoria's Secret is set for a potential turnaround under its newly appointed CEO, Hillary Super, who previously led Savage X Fenty and served as Global CEO of Anthropologie Group, and aims to steer the company toward renewed growth. With a focus on modernizing the brand's image and expanding its digital footprint, the leadership change signals a fresh direction for the lingerie giant.
Investors hope the new CEO’s vision will revitalize sales and enhance profitability, particularly through product innovation and a stronger connection with evolving consumer trends. This leadership shift could be the catalyst that VSCO needs to regain its competitive edge in the retail market.
Sales Improvement & Product Innovation to Aid VSCO
The company is benefiting from improving sales trends in North America, which improved for the fourth consecutive quarter. Strong performance across both physical stores and digital channels is aiding the company. The launch of the Victoria's Secret Dream bra collection and the PINK Friday event helped drive sales momentum, especially in July.
The company is optimistic about its North America business, as it has seen continued improvement in trends through August and into the beginning of the third quarter. Encouraging early feedback on fall assortments for Victoria’s Secret and PINK brands bodes well.
The introduction of innovative products, including the Featherweight Max front-close bra and the Tease Sugar Fleur beauty collection, bodes well for the company. The beauty category, in particular, remained the best-performing segment, showing year-over-year growth for the fourth straight quarter.
Robust Traffic Aiding VSCO
An increase in store and digital traffic, with store traffic outperforming mall averages and strong customer response to new merchandise, is also contributing to the company’s performance. In second-quarter fiscal 2024, the digital market share increased in bras and panties, and overall sports bra market share improved for the second consecutive quarter.
High-single-digit sales growth in the International business and Adore Me, driven by franchise and travel retail partners, and strong performance in the U.K. in the recently concluded quarter.
VSCO Guidance Boosts Confidence
Victoria's Secret raised its 2024 forecast, expecting sales to be down just 1% from the prior mentioned low-single-digit decline. The company is optimistic about continued sales improvement in North America and sustained international growth.
With the revised sales forecast, VSCO expects adjusted operating income for 2024 between $275 million and $300 million, up from the prior mentioned $250-$275 million. The company projects adjusted free cash flow of $200-$225 million, marking an increase from the earlier stated $175-$200 million. For the third quarter of 2024, sales are expected to rise year over year in the low-single digits.
Is it Worth Buying VSCO Stock Now?
VSCO is benefiting from positive sales momentum in North America, product innovation, and increasing store and digital traffic. The leadership change under CEO Hillary Super adds optimism for growth through brand modernization and digital expansion.
Then again, earnings estimates have been revised upward, reflecting optimism about the company’s growth. Over the past 60 days, analysts have raised their estimates for the current and next fiscal years by 14.5% to $1.98 per share and 13.2% to $2.14, respectively.
Image Source: Zacks Investment Research
The company presents a compelling investment opportunity, reflected in its recent share performance and upward earnings estimate revisions. Its low P/E indicates that this is the right time to invest in the stock. VSCO currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.