One NYSE- Listed Personal Care Stock Under Radar - BBWI

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Bath & Body Works, Inc. (NYSE: BBWI) is a prominent American retailer specializing in personal care products, including body lotions, perfumes, candles, and home fragrances. Established in 1990 and headquartered in Columbus, Ohio, the company is widely recognized for its unique product offerings, innovative marketing strategies, and engaging in-store experiences. Bath & Body Works operates both physical retail locations and an e-commerce platform, catering to a diverse consumer base.

Kalkine’s Dividend Income Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Price Performance:

• BBWI's share price has corrected by 20.44% in the past three months. Simultaneously, in the long term, the stock has corrected by 35.89% over the past six months.

• The stock is leaning towards the lower band of its 52-week range of USD 52.99 and 52-week low price of USD 26.21, with the current price near an important support area of USD 27.50- USD 29.50, therefore an expectation of upward movement if the levels sustain.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 44.23, consolidating after some upward trend, with expectations of upward movement.

1.2 The Key Positives, Negatives, and Investment summary   

1.3 Top 10 shareholders:

The top 10 shareholders together form ~47.84% of the total shareholding, signifying diverse shareholding. The Vanguard Group, Inc., and Third Point LLC [Activist], are the biggest shareholders, holding the maximum stake in the company at ~12.49% and ~5.47%, respectively.

1.4 Dividend payments with impressive dividend yield:

Bath & Body Works, Inc. (NYSE: BBWI) has established a robust history of returning value to shareholders through consistent dividend distributions. Following its separation from L Brands, the company initiated its dividend policy with the first declaration shortly after its IPO in August 2021, and it has generally maintained quarterly payments at a rate of USD 0.15 per share, with a focus on sustainable growth. Recently, Bath & Body Works announced the declaration of its regular quarterly dividend of USD 0.20 per share, payable on September 6, 2024, to shareholders of record at the close of business on August 23, 2024. The company is committed to increasing its dividend payouts over time, reflecting its operational performance and cash flow generation while balancing reinvestment in growth opportunities.

1.5 Key Metrics

Bath & Body Works, Inc. (BBWI) has demonstrated a fluctuating revenue and gross profit trajectory from 2020 to 2024. In 2020, the company reported a revenue of USD 5.41 billion, which increased to USD 6.43 billion in 2021, and further rose to USD 7.88 billion in 2022. However, revenues slightly decreased to USD 7.56 billion in 2023 and are projected to decline further to USD 7.43 billion in 2024. Gross profit has followed a similar pattern, starting at USD 2.39 billion in 2020, increasing to USD 3.10 billion in 2021, and reaching USD 3.86 billion in 2022, before dropping to USD 3.26 billion in 2023 and slightly recovering to USD 3.24 billion in 2024. The gross margin percentage peaked at 48.91% in 2022 but has since contracted, recorded at 43.06% in 2023 and anticipated to be 43.56% in 2024.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q2FY25:

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary:

4.1 Technical Summary:

 Price Performance:

• BBWI's share price has corrected by 20.44% in the past three months. Simultaneously, in the long term, the stock has corrected by 35.89% over the past six months.

• The stock is leaning towards the lower band of its 52-week range of USD 52.99 and 52-week low price of USD 26.21, with the current price near an important support area of USD 27.50- USD 29.50, therefore an expectation of upward movement if the levels sustain.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of 44.23, consolidating after some upward trend, with expectations of upward movement.

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is October 08, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.