L Brands Inc. operates as a specialty retailer of womens intimate and other apparel, beauty and personal care products, and accessories. The company operates in three segments: Victorias Secret, Bath & Body Works, and Victoria's Secret and Bath & Body Works International. The company was founded in 1963 and is based in Columbus, Ohio.
LB Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for LB, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that L Brands Inc ranked in the 25th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. In terms of the factors that were most noteworthy in this DCF analysis for LB, they are:
30% of the company's capital comes from equity, which is greater than only 14.55% of stocks in our cash flow based forecasting set.
L Brands Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -0.74. This coverage rate is greater than that of only 19.84% of stocks we're observing for the purpose of forecasting via discounted cash flows.
As a business, L Brands Inc experienced a tax rate of about 0% over the past twelve months; relative to its sector (Consumer Cyclical), this tax rate is higher than merely 0% of stocks generating free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
Want more companies with a valuation profile/forecast similar to that of L Brands Inc? See MGM, SMP, DBI, GPC, and OXM.
The coronavirus pandemic brought global M&A activity to a decade low, according to data analyzed by Refinitiv . Faced with financial and economic uncertainty, cash-strapped companies scrapped near-term expansion plans to fortify their balance sheets and preempt layoffs. Only 8,272 deals worth $485. 3 billion went through in the second quarter. The tally marks a 16-year market low, and the total value represents a 55% year-over-year decline. “It does require more courage to do a deal in this environment,” JPMorgan global M&A co-head Anu Aiyengar told Reuters. “You need a CEO with a lot of credibility with investors, and they need to be doing something very strategic.” Some deals, like bids for WeWork and L Brands Inc's (NYSE: LB ) Victoria Secret or Simon Property Group Inc's (NYSE: SPG ...
The Dow rose 580.25 points, or 2.3%, while the S&P 500 rose 1.5%, and the Nasdaq Composite finished up 1.2%. The early gains were powered by (BA) (BA), which rose 14% on reports test flights of the 737 MAX would begin today, but eventually spread throughout the market. The good news for investors is that the S&P 500 has not closed below 3,000 since May 26, and continues to hold support there.
With little sign of a turnaround at L Brands (LB), I do not see the equity as a compelling trade at current levels. Bonds within the LB structure, on the other hand, offer a good yield, especially following the under-performance year-to-date. With Bath & Body Works helping to offset declines...
Opal Investment Research on Seeking Alpha | June 25, 2020