Shares of intimatewear and beauty retailer Victoria’s Secret (VSCO, Financial) surged by 3.54% following an upgrade by Barclays analyst, thanks to improved leadership, better inventory management, and a return to core brand fundamentals. The stock now trades at $25.13, reflecting an overall positive investor sentiment.
Victoria’s Secret (VSCO, Financial) has exhibited notable price movement recently, bolstered by the company’s efforts to enhance operational efficiency. The stock's GF Value indicates a modest undervaluation, reflecting a GF Value of $31.31. This positive outlook is supported by recent insider buying activity, which adds to investor confidence in the company's future.
Despite an Altman Z-score of 1.86 signaling some level of financial stress, the company’s financial strength is supported by a Beneish M-Score of -2.67, which suggests that Victoria’s Secret is unlikely to be involved in financial manipulation. On the growth front, however, challenges remain. The revenue per share has declined over the past five years, and the company's return on invested capital (ROIC) is below its weighted average cost of capital (WACC), indicating potential inefficiencies in capital utilization.
From a valuation perspective, Victoria’s Secret (VSCO, Financial) presents a mixed picture. The stock's price-to-earnings (PE) ratio stands at 14.61, and its price-to-book (PB) ratio is 4.17. Although the company's market cap is $1,973.35 million, investor caution remains due to negative net current asset value (NCAV) and tangible book value. Analysts looking at VSCO's stock will note that it has enjoyed a 38.71% increase over the past 24 weeks, demonstrating robust short-term momentum.
The stock also benefits from favorable trading metrics such as a free cash flow yield of 9.93% and an EV-to-EBITDA ratio of 8.28, making it attractive from a cash flow and earnings before interest, tax, depreciation, and amortization perspective. While the total debt growth over the past year has declined by 1.5%, the company's overall debt levels and interest coverage ratio of 2.92 are areas for concern.
Investors might consider the insider buy activity, with 1,000 shares purchased over the past three months, as a positive indicator. For a more detailed view of Victoria’s Secret's valuation, refer to the GF Value page.
