Bath & Body Works, Inc. (BBWI) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Bath & Body Works, Inc. (BBWI)

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Intrinsic Value (DCF)

Current$23.40
Intrinsic$34.84
+49%
$17.72$34.84$67.39
Market implies 2% growth for 5 years
DCF analysis suggests BBWI could have 49% upside at 8% growth — verify assumptions match your view.
At $23, the market prices in only 2% growth — below historical 8%, suggesting low expectations.
Range: Bear $18 → Bull $67. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →4%6%8%10%
8%$45$51$57$64
10%$26$31$35$39
12%$16$19$23$26
14%$10$12$15$17

Bull Case

  • Bull case ($67) offers 188% upside at 10% growth, 9% discount
  • 33% margin of safety vs. base case estimate
  • Market-implied growth (2%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($18) implies 24% downside at 6% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$712.80M
Year 2$769.82M
Year 3$831.41M
Year 4$897.92M
Year 5$969.76M
Terminal$14.27B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$660.00MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

Frequently Asked Questions

Is BBWI stock undervalued or overvalued?
🟢 UNDERVALUED

BBWI trades at $23.40 vs. our DCF-derived intrinsic value of $34.84, implying +58% upside. At a 10.0% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of BBWI's future cash flows. The bear case ($19.89) still suggests upside, providing margin of safety.

What is BBWI's intrinsic value?

Using a 5-year DCF model: Base FCF of $660M, projected at 8.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $4.29B net debt and dividing by 0.22B shares: Bear $19.89 | Base $34.84 | Bull $54.82. Current price $23.40 implies +58% to base case.

How is BBWI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($11.98B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 18.2x.