Bath & Body Works beat earnings expectations. Should you buy it?

Bath & Body Works, Inc. (NYSE:BBWI) held its earnings call on Wednesday, 23 February 2022. The company announced an 11% growth in net sales from $2.7 billion in Q421 to $3.0 billion in Q422. The results are for the period ended January 29, 2022.

In today’s earnings call, BBWI announced a $0.80 annual dividend. This represents a 33% increase from the previous year. The quarterly dividend was declared at $0.20 with a books closure date of 18 February 2022 and a payment date of March 24. 


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The news that took the market by surprise is the announcement of a $1 billion accelerated share repurchase program in the next week. A further $500 repurchase will continue thereafter.

The share repurchase program is a signal that the market currently undervalues BBWI shares or that the management believes that the market price should be higher.

BBWI crashes below trended projections

Source – TradingView

At a share price of $50.38, BBWI is trading outside the trend funnel and below the projections by a linear regression trend. The share price is projected to decline further if MA 20 crosses below MA 50. This is after MA 10 tore through MA 50 at a price of $61.

At the time of this analysis, MA 10 was at $57.50, while MA 50 was at $61.13. MA 20 was highest at $65.14.

The analysis shows that the better-than-expected results may delay the share price decline; the share price is likely to crash to the MA average of $31.70.

This would be in response to the market slowdown that has seen many shares decline since the beginning of the year. A sell is therefore recommended for BBWI.

Summary

BBWI announced better than expected Q4 and annual returns. The company also announced an accelerated $1 share repurchase program in a bid to calm the markets. BBWI is a sell based on expectations of further price declines.

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Source: https://invezz.com/news/2022/02/23/bath-body-works-beat-earnings-expectations-should-you-buy-it/