Bath & Body Works, Inc. (NYSE:BBWI) is included among the 10 Best Beaten Down Dividend Stocks to Buy Right Now. Jefferies Cautious on Bath & Body Works (BBWI) as Promotions Weigh on Margins Image by Alexsander-777 from Pixabay Bath & Body Works, Inc. (NYSE:BBWI) is one of the most beaten-down dividend stocks to invest in. The stock has fallen by over 31% since the start of 2025. On October 13, Jef‍feries lowered its⁠ price ta‌rge⁠t for BBWI from $3‌2.00⁠ to $‍28.50,‌ while keeping a Hold r‍ating on the ...

In this article, we will take a look at some of the best beaten-down dividend stocks.Dividend-pay‌ing s‍tocks have traditionally be‍en⁠ a reliable s⁠ource‌ o‍f i⁠nco‌me for investors, though their performance has recently lagged. Sinc‌e the start of 2025, the S&P 500 Dividend Aristocrats Index has gained jus‍t over 2.5%, compared with nearly 13% for t‍he broader ma‌rket.Howard Silverblatt, Senior‌ Index Analyst​ at S&P Dow Jones Indice‍s, noted t‍hat dividend gro⁠wt‍h remained slow in‌ the thi⁠rd⁠ quarter o ...

Core Insights - The article discusses the author's background as a freelance business writer with a focus on restaurants, retailers, and food manufacturers, emphasizing long-term investment opportunities and valuation metrics [1]. Group 1: Author's Background - The author has experience writing for the Motley Fool Blogging Network and has received several editor's choice awards [1]. - The focus areas include growth opportunities and valuation metrics within the restaurant and retail sectors [1]. - The author typically seeks long-term investment opportunities, planning to hold stocks for several years [1].

Core Insights - The article discusses the author's background as a freelance business writer with a focus on restaurants, retailers, and food manufacturers, emphasizing long-term investment opportunities and valuation metrics [1]. Group 1: Author's Background - The author has experience writing for the Motley Fool Blogging Network and has received several editor's choice awards [1]. - The author has transitioned to writing for the main Motley Fool site, maintaining a focus on growth opportunities in the food and retail sectors [1]. - The investment strategy involves looking for long-term opportunities and planning to hold stocks for several years [1].

Core Viewpoint - Bath & Body Works (BBWI) stock has decreased by 33% year to date, contrasting with a 13% increase in the S&P 500, driven by waning consumer demand, margin pressure, and investor fatigue [2][6] Valuation Metrics - BBWI appears inexpensive, trading at 7.7 times earnings, 0.7 times sales, and 6.9 times free cash flow, significantly lower than S&P 500 averages of 23.6x earnings, 3.2x sales, and 20.6x free cash flow [3] Historical Performance - Historically, BBWI has experienced dramatic declines during economic downturns, including a 67% drop during the inflation shock in 2022 and a 79% decline during the 2008 financial crisis [7][10] Revenue and Margin Analysis - Revenue has stagnated, with a decline of 1.8% on average over three years and only 0.2% over the last twelve months on $7.4 billion in sales, indicating insufficient growth momentum [6][14] - Operating margin stands at 17.1%, net margin at 9.9%, and cash flow margin at 13.6%, suggesting that minor revenue declines can significantly impact earnings [6][14] Debt and Financial Health - BBWI has $5 billion in debt against a $5.4 billion market cap, with only $364 million in cash, indicating a thin balance sheet and limited flexibility during downturns [6][14] Consumer Sensitivity - The company is heavily reliant on discretionary spending, making it vulnerable to changes in consumer confidence and spending habits [14] Alternative Investment Options - For investors seeking reduced volatility, the High Quality Portfolio has outperformed its benchmark with returns exceeding 105% since its establishment, offering superior returns with diminished risk [5][13]

Core Viewpoint - The article highlights two stocks, Stanley Black & Decker and Bath & Body Works, as strong options for income investors due to their solid dividend yields, financial upside, and trusted brand power. Group 1: Stanley Black & Decker - Stanley Black & Decker is a global leader in tools and outdoor products, with well-known brands such as DEWALT, CRAFTSMAN, BLACK+DECKER, and STANLEY [2] - The company recently increased its quarterly cash dividend by $0.01 to $0.83 per share, resulting in a dividend yield of 4.5%, marking its long-standing record for consecutive dividend payments among industrial companies [3] - The company aims to improve margins through initiatives expected to generate $2 billion in pre-tax run-rate cost savings by the end of 2025, with a long-term gross margin target of over 35% [6] Group 2: Bath & Body Works - Bath & Body Works operates in the specialty home fragrance and body care market, offering a dividend yield of 3.1% and significant growth potential through store upgrades, digital opportunities, and international expansion [7] - The company is projected to exceed $7.3 billion in sales for fiscal 2024, with plans to expand into new product categories such as shaving and facial care, as well as haircare and men's care [8][9] - Currently, only 5% of Bath & Body Works' sales come from international markets, indicating substantial growth opportunities as the company expands globally, having recently opened its 500th international store in London [10]

Market Overview - The ongoing US government shutdown is causing delays in the release of key economic reports, including payroll and inflation data, which could lead to increased jobless claims and a rise in the unemployment rate to 4.7% [2] - Higher bond yields are limiting stock gains, with the 10-year T-note yield rising to 4.15% [3] - Stock indexes are mostly higher, with the Nasdaq 100 reaching a new all-time high, driven by gains in chipmakers and AI-infrastructure stocks [4] Economic Indicators - The S&P 500 Index is up by 0.20%, while the Dow Jones is down by 0.10%, and the Nasdaq 100 is up by 0.60% [5] - Market focus includes developments regarding tariffs, trade, and the government shutdown, with upcoming releases of FOMC meeting minutes and consumer sentiment index [6] Corporate Earnings - Over 22% of S&P 500 companies have provided guidance for Q3 earnings that are expected to exceed analysts' expectations, although Q3 profits are projected to rise by only 7.2%, the smallest increase in two years [7] Interest Rates - The market is pricing in a 95% chance of a 25 basis point rate cut at the next FOMC meeting [8] - December 10-year T-notes are under pressure due to stock strength and upcoming Treasury auctions [9] European Market - European government bond yields are rising, with the 10-year German bund yield at 2.720% and the UK gilt yield at 4.734% [10] Stock Movements - Advanced Micro Devices (AMD) shares surged over 26% after signing a deal with OpenAI, leading gains in chipmakers and AI-infrastructure stocks [12] - Cryptocurrency-exposed stocks rallied as Bitcoin prices rose above $125,000, benefiting companies like Coinbase and Galaxy Digital [13] - Comerica (CMA) shares increased by over 15% following an acquisition agreement with Fifth Third Bancorp [14] - Micron Technology (MU) rose more than 6% after an upgrade from Morgan Stanley [14]

Core Insights - Bath & Body Works (NYSE: BBWI) is currently an intriguing company within the consumer discretionary sector due to its recent margin contraction despite facing negative catalysts [1] Company Overview - The company has experienced margin contraction over the past period, which is a significant concern for its financial health [1] Investment Considerations - The potential for a beneficial long position in BBWI may arise within the next 72 hours, indicating a possible investment opportunity [1]

Core Viewpoint - Bath & Body Works (NYSE: BBWI) is currently an intriguing company within the consumer discretionary sector, particularly due to its recent margin contraction despite other positive factors [1]. Group 1: Company Overview - Bath & Body Works operates in the consumer discretionary sector, which is characterized by its sensitivity to economic cycles and consumer spending patterns [1]. Group 2: Financial Performance - The company has experienced negative catalysts, specifically margin contraction, which may impact its overall financial health and investor sentiment [1].

Core Insights - Bath & Body Works (BBWI) reported a strong second quarter for fiscal 2025, with net sales of $1.5 billion, reflecting a year-over-year increase of 1.5%, and adjusted earnings per share (EPS) of 37 cents, both exceeding management's expectations [1][9] Financial Performance - The company raised its full-year adjusted EPS guidance to a range of $3.35-$3.60, up from the previous forecast of $3.25-$3.60, compared to an adjusted EPS of $3.29 in fiscal 2024 [2] - Net sales growth expectations were narrowed to 1.5-2.7%, down from the prior outlook of 1-3% [2] - BBWI anticipates a gross profit rate of approximately 44%, indicating resilience in profitability despite cost pressures [2] Sales and Growth Projections - For the third quarter, BBWI expects sales growth of 1-3% and EPS between 37-45 cents [4] - The company is investing in digital enhancements, in-store technology, and loyalty programs to improve consumer engagement and operational efficiency [4] Shareholder Returns - The share repurchase plan was increased to $400 million from $300 million, reflecting confidence in cash generation and long-term growth [5] - Management expects consistent net sales growth of 1-3% for the second half of the year while managing tariff costs and investing in growth [5] Strategic Initiatives - BBWI's improved guidance highlights its ability to achieve steady sales growth, maintain cost discipline, and leverage new initiatives, including collaborations and expanded distribution channels, for revenue and profit expansion [6] Market Performance - BBWI shares have decreased by 5.9% over the past three months, contrasting with an 18.3% growth in the industry [7] - The company is trading at a forward 12-month price-to-sales ratio of 0.71X, significantly lower than the industry average of 1.96X, with a Value Score of A [8]