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Is Victoria's Secret Stock a Buy at Its Current Valuation?
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Key Takeaways
VSCO posted FY25 sales of $6.6B ( 5%) and Q4 net sales of $2.27B with comps up 8%.
VSCO's 13.75x forward P/E is below sub-industry 15.06x, sector 25.31x and S&P 500 at 21.73x.
VSCO expects $160M FY26 gross tariff cost, mitigated to $40M net; FY25 free cash flow was $244M.
Victoria’s Secret & Co. (VSCO - Free Report) is coming off a stronger fiscal 2025 that reshaped investor expectations. The stock now trades around 13.75x forward 12-month earnings, a level that puts the focus on whether recent gains are durable.
The setup is straightforward. If the company can sustain growth while protecting margin quality through tariffs and higher costs, the valuation has room to work. If momentum cools quickly, the multiple can compress.
VSCO Stock Setup After a Strong FY25
Fiscal 2025 net sales were $6.6 billion, up 5% year over year, supported by improved demand across categories and channels. In the fourth quarter, comparable sales increased 8%, reflecting broad-based strength tied to product and customer engagement.
The quarter also delivered an earnings beat. Adjusted earnings were $2.77 per share, above the previously communicated range and ahead of the Zacks Consensus Estimate of $2.48. Net sales were $2.27 billion, up 7.8% year over year and above the company’s guided range.
The market’s next question is durability. Management points to share gains in intimates, expanding customer counts and higher spend per customer as signals that demand is becoming structurally supported, not just promotion-led.
Victoria's Secret Valuation vs Peers and History
At roughly 13.75x forward 12-month earnings, VSCO trades below the Zacks sub-industry average of 15.06x and well below the Zacks sector at 25.31x and the S&P 500 at 21.73x. That gap matters because it suggests investors are still applying a discount for perceived risk in the recovery.
History shows how much sentiment can swing. Over the past five years, the stock has traded as high as 25.13x and as low as 3.64x, with a three-year median of 8.68x. Today’s multiple is above the median, but far from the high.
The re-rating implication is clear. If comp performance and margin quality hold, the stock can justify moving closer to peer valuation. Tapestry, Inc. (TPR - Free Report) and Levi Strauss & Co. (LEVI - Free Report) , both listed among industry peers, provide a reminder that apparel names can command stronger multiples when execution and earnings visibility improve.
Victoria's Secret & Co. Price, Consensus and EPS Surprise
In plain terms, the rank is driven by trends in earnings estimate revisions and the earnings outlook, which is the core signal used in the Zacks rating framework. The style profile reinforces the idea that the stock screens well on valuation and growth factors, even if the near-term momentum score is less supportive.
That mix can be attractive for investors who want improving fundamentals without paying a premium multiple. It also means expectations are rising, so execution through the next few quarters becomes even more important.
Victoria's Secret Margin Path and Tariff Math
Tariffs are the key swing factor in the margin story. The company absorbed about $85 million of tariff pressure in fiscal 2025 and still delivered a 37% adjusted gross margin.
For fiscal 2026, management expects an incremental gross tariff cost of approximately $160 million. After mitigation, the projected net impact is about $40 million. Tariffs are expected to hit the first half hardest, with the first quarter seeing the largest pressure.
The mitigation levers matter because they determine whether the business keeps its margin-quality progress. Management highlighted vendor cost optimization, sourcing diversification, freight mix efficiency and strategic pricing actions as tools to offset costs.
VSCO Balance Sheet and Cash Flow Support
Liquidity is a stabilizer as the company invests through volatility. At the end of fiscal 2025, cash and cash equivalents were about $518 million. The company also has access to an asset-based lending facility that remains largely undrawn.
Cash generation improved as profitability strengthened. Adjusted free cash flow was about $244 million in fiscal 2025, and management expects fiscal 2026 free cash flow to be between $220 million and $250 million.
That flexibility supports ongoing investment in customer experience, technology and the broader transformation, while providing a cushion if tariffs or demand trends turn less favorable.
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Is Victoria's Secret Stock a Buy at Its Current Valuation?
Key Takeaways
Victoria’s Secret & Co. (VSCO - Free Report) is coming off a stronger fiscal 2025 that reshaped investor expectations. The stock now trades around 13.75x forward 12-month earnings, a level that puts the focus on whether recent gains are durable.
The setup is straightforward. If the company can sustain growth while protecting margin quality through tariffs and higher costs, the valuation has room to work. If momentum cools quickly, the multiple can compress.
VSCO Stock Setup After a Strong FY25
Fiscal 2025 net sales were $6.6 billion, up 5% year over year, supported by improved demand across categories and channels. In the fourth quarter, comparable sales increased 8%, reflecting broad-based strength tied to product and customer engagement.
The quarter also delivered an earnings beat. Adjusted earnings were $2.77 per share, above the previously communicated range and ahead of the Zacks Consensus Estimate of $2.48. Net sales were $2.27 billion, up 7.8% year over year and above the company’s guided range.
The market’s next question is durability. Management points to share gains in intimates, expanding customer counts and higher spend per customer as signals that demand is becoming structurally supported, not just promotion-led.
Victoria's Secret Valuation vs Peers and History
At roughly 13.75x forward 12-month earnings, VSCO trades below the Zacks sub-industry average of 15.06x and well below the Zacks sector at 25.31x and the S&P 500 at 21.73x. That gap matters because it suggests investors are still applying a discount for perceived risk in the recovery.
History shows how much sentiment can swing. Over the past five years, the stock has traded as high as 25.13x and as low as 3.64x, with a three-year median of 8.68x. Today’s multiple is above the median, but far from the high.
The re-rating implication is clear. If comp performance and margin quality hold, the stock can justify moving closer to peer valuation. Tapestry, Inc. (TPR - Free Report) and Levi Strauss & Co. (LEVI - Free Report) , both listed among industry peers, provide a reminder that apparel names can command stronger multiples when execution and earnings visibility improve.
Victoria's Secret & Co. Price, Consensus and EPS Surprise
Victoria's Secret & Co. price-consensus-eps-surprise-chart | Victoria's Secret & Co. Quote
VSCO Earnings Power and the Near-Term Rating Signal
For the one- to three-month horizon, VSCO sports a Zacks Rank #1 (Strong Buy). It also posts Style Scores of VGM A, Value A, Growth A and Momentum C. You can see the complete list of today’s Zacks #1 Rank stocks here.
In plain terms, the rank is driven by trends in earnings estimate revisions and the earnings outlook, which is the core signal used in the Zacks rating framework. The style profile reinforces the idea that the stock screens well on valuation and growth factors, even if the near-term momentum score is less supportive.
That mix can be attractive for investors who want improving fundamentals without paying a premium multiple. It also means expectations are rising, so execution through the next few quarters becomes even more important.
Victoria's Secret Margin Path and Tariff Math
Tariffs are the key swing factor in the margin story. The company absorbed about $85 million of tariff pressure in fiscal 2025 and still delivered a 37% adjusted gross margin.
For fiscal 2026, management expects an incremental gross tariff cost of approximately $160 million. After mitigation, the projected net impact is about $40 million. Tariffs are expected to hit the first half hardest, with the first quarter seeing the largest pressure.
The mitigation levers matter because they determine whether the business keeps its margin-quality progress. Management highlighted vendor cost optimization, sourcing diversification, freight mix efficiency and strategic pricing actions as tools to offset costs.
VSCO Balance Sheet and Cash Flow Support
Liquidity is a stabilizer as the company invests through volatility. At the end of fiscal 2025, cash and cash equivalents were about $518 million. The company also has access to an asset-based lending facility that remains largely undrawn.
Cash generation improved as profitability strengthened. Adjusted free cash flow was about $244 million in fiscal 2025, and management expects fiscal 2026 free cash flow to be between $220 million and $250 million.
That flexibility supports ongoing investment in customer experience, technology and the broader transformation, while providing a cushion if tariffs or demand trends turn less favorable.