Bath & Body Works, Inc. (NYSE:BBWI) shareholders won't be pleased to see that the share price has had a very rough month, dropping 26% and undoing the prior period's positive performance. Longer-term shareholders will rue the drop in the share price, since it's now virtually flat for the year after a promising few quarters.
Although its price has dipped substantially, given about half the companies in the United States have price-to-earnings ratios (or "P/E's") above 17x, you may still consider Bath & Body Works as an attractive investment with its 9.7x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.
Recent times have been pleasing for Bath & Body Works as its earnings have risen in spite of the market's earnings going into reverse. It might be that many expect the strong earnings performance to degrade substantially, possibly more than the market, which has repressed the P/E. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.
NYSE:BBWI Price to Earnings Ratio vs Industry July 2nd 2024 Want the full picture on analyst estimates for the company? Then our free report on Bath & Body Works will help you uncover what's on the horizon.
Is There Any Growth For Bath & Body Works?
In order to justify its P/E ratio, Bath & Body Works would need to produce sluggish growth that's trailing the market.
If we review the last year of earnings growth, the company posted a terrific increase of 24%. Despite this strong recent growth, it's still struggling to catch up as its three-year EPS frustratingly shrank by 12% overall. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Shifting to the future, estimates from the analysts covering the company suggest earnings should grow by 2.2% per year over the next three years. With the market predicted to deliver 10% growth per annum, the company is positioned for a weaker earnings result.
In light of this, it's understandable that Bath & Body Works' P/E sits below the majority of other companies. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.
The Key Takeaway
Bath & Body Works' recently weak share price has pulled its P/E below most other companies. Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
As we suspected, our examination of Bath & Body Works' analyst forecasts revealed that its inferior earnings outlook is contributing to its low P/E. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.
You should always think about risks. Case in point, we've spotted 4 warning signs for Bath & Body Works you should be aware of, and 1 of them can't be ignored.
If these risks are making you reconsider your opinion on Bath & Body Works, explore our interactive list of high quality stocks to get an idea of what else is out there.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
Bath & Body Worksは、株価が非常に落ち込んでおり、先行きが不透明なため、NYSE: BBWIの株主は大変不満であろう。長期的な株主は、株価の下落を嘆き、期待された数四半期の後、今年ほぼフラットになっている。
株価が大幅に下落したため、米国の約半数の企業が17倍を上回るP / E比率を持っていることを考慮しても、Bath & Body Worksの9.7倍のP / E比率を持つ魅力的な投資として見ることができます。ただし、単純にP / E比率を受け入れることは賢明ではありません。理由が限られている可能性があります。
市場の収益が逆転している中、最近の時代はBath & Body Worksにとって満足のいくものであり、収益は増加し続けています。計画よりも市場以上に強い収益性が期待されているため、株式市場よりも大幅に低下する可能性があります。表示されなかった場合、現有株主は株価の将来方向にかなり楽観的である理由があります。
NYSE:BBWI株価収益率と業種の比較2024年7月2日会社に関するアナリスト予測の全体像が欲しい場合は、弊社のBath & Body Worksに関する無料レポートをご覧いただくと、将来について調べることができます。
Bath & Body Worksの成長はありますか?
P / E比率を正当化するためには、Bath & Body Worksは市場を下回る成長を生み出す必要があります。直近の収益成長を見ると、同社は驚異的な24%の増加を記録しました。この強い直近の収益成長にもかかわらず、3年間のEPSは12%と全体的に低下しています。したがって、同社の収益成長は最近望ましくないものになっています。
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オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。