Bath & Body Works shares up 25% on Q3 results: should you take profits?

on Nov 16, 2022
  • Bath & Body Works reports better-than-expected results for its fiscal Q3.
  • G Squared's Victoria Greene says the stock is stuck between $30 and $40.
  • Bath & Body Works shares are now trading just below their 200-day MA.

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Bath & Body Works Inc (NYSE: BBWI) jumped nearly 25% in extended trading after the retail chain reported better-than-expected results for its fiscal third quarter.

Should you sell Bath & Body Works shares into the strength?

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Investors are also rewarding the raised future guidance.

Bath & Body Works now expects to earn $3.0 a share to $3.20 a share this year, including up to $1.65 in Q4, as per the earnings press release. In comparison, analysts were at $1.54 for the quarter and $2.89 for fiscal 2022 as a whole.

But that’s not sufficient to get Victoria Greene (G Squared Private Wealth) excited about the Bath & Body Works shares. On CNBC’s “Power Lunch”, she said:

I can’t get on board with it. It’s burning free cash flow, cash on hand has dwindled the past three quarters versus a debt at $6.0 billion. Sales are 5.0% lower. I just don’t see the catalyst other than that it’s cheap, but it might be cheap for a reason.

She expects to stock to be range bound between $30 and $40.

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Then, of course, there’s fear of a recession and it remains to be known how well beauty products and personal-care items hold up in the face of a consumer slowdown.

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Bath & Body Works tops estimates in its third quarter

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  • Net income was cut nearly in half from $177 million to $91 million
  • Per-share earnings also fell significantly from 66 cents to 40 cents
  • Revenue at $1.60 billion was also down 5.0% versus a year ago
  • Consensus was 20 cents a share of EPS on $1.56 billion in revenue

Bath & Body Works Inc has been committed to cutting costs in recent months. Earlier in November, it named Gina Boswell as its new Chief Executive to take the helm on December 1st.

At $39, Bath & Body Works shares in after-hours are trading just below their 200-day Moving Average. The retail stock is still down nearly 45% for the year.


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