Is Bath & Body Works (BBWI) Cheap As Hype Lab Reignites Its Brand?

Hype Lab puts Bath & Body Works stock in focus

Bath & Body Works (BBWI) is rolling out Hype Lab, a test kitchen for small batch, limited edition fragrances built around social and cultural trends and real time customer feedback.

Investors have reacted quickly to Hype Lab, with Bath & Body Works posting a 1-day share price return of 7.86% and a 30-day share price return of 22.25%. However, the 1-year total shareholder return is down 18%, which shows short term momentum building against a weaker long term record.

Scan how Bath & Body Works compares to other retailers showing strong price momentum and fundamentals in the 33 high quality undervalued stocks.

Bulls see Hype Lab and recent gains as proof Bath & Body Works is on the mend. Bears point to weak multi year returns. Which story does the current valuation lean toward?

Most Popular Narrative: 28.9% Undervalued

According to the most widely followed narrative, Bath & Body Works could be worth $28.73 a share compared with the last close at $20.44. This puts the recent Hype Lab rally in the context of a wider story of potential undervaluation.

BBW is set to renegotiate leases over time. Favorably updated rent agreements, new off-mall locations, and productivity gains from the White Barn format conversion could help boost profits.

See why 24 investors see Bath & Body Works as 29% undervalued.

Result: Fair Value of $28.73 (UNDERVALUED)

Still, Bath & Body Works relies heavily on mall traffic and fickle fragrance trends. Weaker footfall or missed customer tastes could quickly challenge the undervalued story.

Find out about the key risks to this Bath & Body Works narrative.

Next Steps

Mixed signals often create the most interesting setups for Bath & Body Works, so move fast, review the full picture, and weigh both the 2 key rewards and 3 important warning signs.

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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.

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