Bath & Body Works Buyback as an Undervaluation Signal

2 months ago

Tobias Carlisle

"I like Bath and Body Works because... they have a $5 billion market cap, generate about $750 million in free cash flow, and are executing a $500 million buyback right now, which is roughly 10% of their outstanding shares. Management is clearly signaling that they view the stock as undervalued."

The recommendation for Bath & Body Works (ticker: BBWI) is based on strong free cash flow and an aggressive buyback program. The quantitative details of a $500 million buyback on a $5 billion market cap with $750 million free cash flow support the thesis that the stock is trading at an attractive valuation. This creates a buy signal with a contrarian value angle and limited downside due to management support.

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