Value
8.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.8 |
| P/S | 9.9 |
| EV/EBITDA | 8.2 |
| Fwd P/E | 9.7 |
| PEG | 8.2 |
| Analyst target | 6.0 |
- ▸Forward P/E: 7.3x
- ▸PEG: 0.81
- ▸Attractively valued
BBWI · Why this verdict
Why Bath & Body Works (BBWI) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Bath & Body Works trades at a deeply discounted forward P/E with approximately 14% upside to the near-term price target and a roughly 2-to-1 risk/reward ratio in the buyer's favor, but a confirmed technical downtrend and a news-driven caution overlay prevent a clean entry and require the longer-term trend to repair before the valuation thesis can fully express.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a forward P/E of 6.8x, a PEG ratio of 0.75, and a margin of safety cited at 63%, the stock screens attractively priced; the near-term target implies approximately 14% upside with a risk/reward ratio of roughly 2-to-1 in the buyer's favor, and analysts see approximately 31% upside to their consensus targets. Value | The stock advances toward the $22.25 price target over the next 12 months as the valuation discount narrows, with the analyst consensus upside of 31% providing a longer-range reference point for the full thesis. | →Stable |
| CounterCheap multiples in a confirmed technical downtrend can remain depressed for extended periods without a catalyst; if the consumer spending environment softens further, forward earnings estimates could be cut, eroding the low-multiple thesis before the price recovers. | ||
The most recent annual filing identified three medium-severity concentration risks, suggesting meaningful reliance on a limited set of suppliers, customers, or channels — a potential shock amplifier if any concentration point is disrupted in a consumer spending downturn. Risk | Concentration risk disclosures fall to fewer than 2 medium-rated items in the next annual filing, indicating active diversification of the critical dependencies. | ↑Improving |
| CounterMedium-severity concentration risks are common in specialty retail and often persist for years without causing material harm; their presence in the filing may reflect disclosure discipline rather than acute operational vulnerability. | ||
The stock sits below a 200-day moving average that is declining at 7.1% per month — a confirmed downtrend, not a pullback — and a death cross has recently formed; while the MACD is improving and RSI is at 62, the longer-term structural trend is negative and requires the moving average to flatten and reverse before a technically clean setup emerges. Momentum | The 200-day moving average flattens and turns higher within two quarters, and the stock establishes a sustained position above it, reversing the confirmed downtrend. | ↑Improving |
| CounterThe improving MACD and RSI near 62 indicate near-term price momentum is recovering even as the longer-term trend is still negative; if earnings continue to beat, the stock could reclaim the 200-day average before the indicator formally turns positive. | ||
After two consecutive quarters of missing estimates, the two most recent quarters each beat consensus — by 10% and 16% respectively — suggesting the business may be stabilizing and that more conservative guidance has given way to a period of over-delivery. Earnings | A third consecutive quarterly beat above 5% cements the view that the prior misses were a temporary soft patch rather than a structural earnings deterioration. | →Stable |
| CounterTwo beats after two misses leaves the four-quarter record split evenly, with a modest average across all periods; the signal is too early to call a sustained inflection, and revenue continues to decline approximately 3% year-over-year, leaving top-line momentum absent. | ||
At a forward P/E of 6.8x, a PEG ratio of 0.75, and a margin of safety cited at 63%, the stock screens attractively priced; the near-term target implies approximately 14% upside with a risk/reward ratio of roughly 2-to-1 in the buyer's favor, and analysts see approximately 31% upside to their consensus targets.
→StableValue
- Expectation
- The stock advances toward the $22.25 price target over the next 12 months as the valuation discount narrows, with the analyst consensus upside of 31% providing a longer-range reference point for the full thesis.
CounterCheap multiples in a confirmed technical downtrend can remain depressed for extended periods without a catalyst; if the consumer spending environment softens further, forward earnings estimates could be cut, eroding the low-multiple thesis before the price recovers.
The most recent annual filing identified three medium-severity concentration risks, suggesting meaningful reliance on a limited set of suppliers, customers, or channels — a potential shock amplifier if any concentration point is disrupted in a consumer spending downturn.
↑ImprovingRisk
- Expectation
- Concentration risk disclosures fall to fewer than 2 medium-rated items in the next annual filing, indicating active diversification of the critical dependencies.
CounterMedium-severity concentration risks are common in specialty retail and often persist for years without causing material harm; their presence in the filing may reflect disclosure discipline rather than acute operational vulnerability.
The stock sits below a 200-day moving average that is declining at 7.1% per month — a confirmed downtrend, not a pullback — and a death cross has recently formed; while the MACD is improving and RSI is at 62, the longer-term structural trend is negative and requires the moving average to flatten and reverse before a technically clean setup emerges.
↑ImprovingMomentum
- Expectation
- The 200-day moving average flattens and turns higher within two quarters, and the stock establishes a sustained position above it, reversing the confirmed downtrend.
CounterThe improving MACD and RSI near 62 indicate near-term price momentum is recovering even as the longer-term trend is still negative; if earnings continue to beat, the stock could reclaim the 200-day average before the indicator formally turns positive.
After two consecutive quarters of missing estimates, the two most recent quarters each beat consensus — by 10% and 16% respectively — suggesting the business may be stabilizing and that more conservative guidance has given way to a period of over-delivery.
→StableEarnings
- Expectation
- A third consecutive quarterly beat above 5% cements the view that the prior misses were a temporary soft patch rather than a structural earnings deterioration.
CounterTwo beats after two misses leaves the four-quarter record split evenly, with a modest average across all periods; the signal is too early to call a sustained inflection, and revenue continues to decline approximately 3% year-over-year, leaving top-line momentum absent.
Per-dimension breakdown
Quality
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 9.3 |
| Gross margin | 4.6 |
| Op margin | 4.4 |
| Net margin | 5.0 |
| Current ratio | 5.1 |
| FCF quality | 7.0 |
| Moat | 4.5 |
| Piotroski F | 6.7 |
- ▸No competitive moat
Growth
5.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.7 |
| EPS growth | 10.0 |
- ▸Declining revenue: -3%
Momentum
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.8 |
| MACD | 0.7 |
| OBV | 10.0 |
| MA position | 5.0 |
| Volume | 2.6 |
- ▸Uptrend pullback (RSI 37) - buy opportunity
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 7.7 |
| erm sentiment | 4.0 |
- ▸Analyst upside: 20%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.0 |
| quality rank | 8.3 |
| growth rank | 0.4 |
- ▸Attractive P/E vs peers
- ▸Best-in-class margins
Technical
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.7 |
| support resistance | 6.0 |
| 52w position | 2.8 |
| gap | 6.0 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.5 |
| days to cover | 8.4 |
| volatility | 0.0 |
| put call | 9.3 |
| implied vol | 2.1 |
| max pain risk | 7.0 |
| beta | 5.6 |
- ▸High IV: 68%
- ▸Concentration risks: 3 MED (10-K Item 1A)
Catalyst
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 4.0 |
| dividend safety | 8.5 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend aristocrat: 3.8% yield
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier -2 (HOLD_IF_HOLDING → SELL_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=-2Passed (6)
- MOMENTUM:5.2>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:38d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.7<1.5@spot
Warning (3)
- MOMENTUM:5.2<5.5 (soft — BUY_NOW allowed but watch)
- DEATH_CROSS:momentum=5.2>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.74
Upside
+8.4%
Downside
11.3%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.35>1.3, MCap $4.2B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.2>=4.5. Top dim: Value at 8.5; weakest: Catalyst at 4.9. No conviction either direction.
The strongest dimensions are Value at 8.5, Insider at 7.3, and Quality at 5.8; the weakest are Catalyst at 4.9, Technical at 5.1, and Momentum at 5.2. The V9 engine flagged 1 failed gate with 3 warnings, producing an asymmetric reward-to-risk of 0.74 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Deep Value Favorable Risk Reward
Trip ifForward earnings estimates are revised downward by more than 15%, removing the valuation margin of safety.
- P2Confirmed Downtrend Caps Technical Recovery
Trip ifThe 200-day moving-average slope rises above 0% and price rises above the 200-day moving average for 4 consecutive weeks.
- P3Earnings Recovery Two Consecutive Beats
Trip ifEPS surprise falls below -5% for 2 consecutive quarters, reverting to a miss pattern.
- P4Concentration Risks Amplify Downside
Trip ifConcentration risk disclosures fall to fewer than 2 medium-rated items in the next annual 10-K filing.