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    Bath & Body Works, Inc. (NYSE:BBWI) Stock Catapults 33% Though Its Price And Business Still Lag The Market

    Simply Wall St·12/21/2025 12:27:02
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    Bath & Body Works, Inc. (NYSE:BBWI) shareholders are no doubt pleased to see that the share price has bounced 33% in the last month, although it is still struggling to make up recently lost ground. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 50% in the last twelve months.

    In spite of the firm bounce in price, Bath & Body Works may still be sending very bullish signals at the moment with its price-to-earnings (or "P/E") ratio of 5.8x, since almost half of all companies in the United States have P/E ratios greater than 20x and even P/E's higher than 34x are not unusual. However, the P/E might be quite low for a reason and it requires further investigation to determine if it's justified.

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    Bath & Body Works hasn't been tracking well recently as its declining earnings compare poorly to other companies, which have seen some growth on average. The P/E is probably low because investors think this poor earnings performance isn't going to get any better. If you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

    View our latest analysis for Bath & Body Works

    pe-multiple-vs-industry
    NYSE:BBWI Price to Earnings Ratio vs Industry December 21st 2025
    If you'd like to see what analysts are forecasting going forward, you should check out our free report on Bath & Body Works.

    Is There Any Growth For Bath & Body Works?

    In order to justify its P/E ratio, Bath & Body Works would need to produce anemic growth that's substantially trailing the market.

    Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 20%. The last three years don't look nice either as the company has shrunk EPS by 15% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.

    Shifting to the future, estimates from the analysts covering the company suggest earnings should grow by 4.7% per year over the next three years. Meanwhile, the rest of the market is forecast to expand by 11% per annum, which is noticeably more attractive.

    In light of this, it's understandable that Bath & Body Works' P/E sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

    The Key Takeaway

    Even after such a strong price move, Bath & Body Works' P/E still trails the rest of the market significantly. Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.

    As we suspected, our examination of Bath & Body Works' analyst forecasts revealed that its inferior earnings outlook is contributing to its low P/E. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.

    There are also other vital risk factors to consider and we've discovered 3 warning signs for Bath & Body Works (1 is significant!) that you should be aware of before investing here.

    Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.