Looking for a Growth Stock? 3 Reasons Why Bath & Body Works (BBWI) is a Solid Choice
That's because, these stocks usually carry above-average risk and volatility. In fact, betting on a stock for which the growth story is actually over or nearing its end could lead to significant loss.
However, the task of finding cutting-edge growth stocks is made easy with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.
Bath & Body Works (BBWI) is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank.
Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Here are three of the most important factors that make the stock of this owner of Victoria's Secret, Bath & Body Works and other chain stores a great growth pick right now.
Earnings Growth
Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.
While the historical EPS growth rate for Bath & Body Works is 0.1%, investors should actually focus on the projected growth. The company's EPS is expected to grow 5.7% this year, crushing the industry average, which calls for EPS growth of 2.9%.
Impressive Asset Utilization Ratio
Asset utilization ratio -- also known as sales-to-total-assets (S/TA) ratio -- is often overlooked by investors, but it is an important indicator in growth investing. This metric shows how efficiently a firm is utilizing its assets to generate sales.
Right now, Bath & Body Works has an S/TA ratio of 1.49, which means that the company gets $1.49 in sales for each dollar in assets. Comparing this to the industry average of 1.28, it can be said that the company is more efficient.
In addition to efficiency in generating sales, sales growth plays an important role. And Bath & Body Works is well positioned from a sales growth perspective too. The company's sales are expected to grow 2.4% this year versus the industry average of 1.2%.
Promising Earnings Estimate Revisions
Beyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
There have been upward revisions in current-year earnings estimates for Bath & Body Works. The Zacks Consensus Estimate for the current year has surged 0.7% over the past month.
Bottom Line
Bath & Body Works has not only earned a Growth Score of A based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
This combination positions Bath & Body Works well for outperformance, so growth investors may want to bet on it.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Bath & Body Works, Inc. (BBWI) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
43 minutes ago
- Yahoo
Here is Why Growth Investors Should Buy Howmet (HWM) Now
Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. But finding a growth stock that can live up to its true potential can be a tough task. In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end. However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects, makes it pretty easy to find cutting-edge growth stocks. Howmet (HWM) is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank. Research shows that stocks carrying the best growth features consistently beat the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better. While there are numerous reasons why the stock of this maker of engineered products for the aerospace and other industries is a great growth pick right now, we have highlighted three of the most important factors below: Earnings Growth Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration. While the historical EPS growth rate for Howmet is 30.1%, investors should actually focus on the projected growth. The company's EPS is expected to grow 32.8% this year, crushing the industry average, which calls for EPS growth of 18.9%. Impressive Asset Utilization Ratio Asset utilization ratio -- also known as sales-to-total-assets (S/TA) ratio -- is often overlooked by investors, but it is an important indicator in growth investing. This metric exhibits how efficiently a firm is utilizing its assets to generate sales. Right now, Howmet has an S/TA ratio of 0.72, which means that the company gets $0.72 in sales for each dollar in assets. Comparing this to the industry average of 0.66, it can be said that the company is more efficient. In addition to efficiency in generating sales, sales growth plays an important role. And Howmet looks attractive from a sales growth perspective as well. The company's sales are expected to grow 9% this year versus the industry average of 2.9%. Promising Earnings Estimate Revisions Beyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements. There have been upward revisions in current-year earnings estimates for Howmet. The Zacks Consensus Estimate for the current year has surged 4% over the past month. Bottom Line Howmet has not only earned a Growth Score of B based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #1 because of the positive earnings estimate revisions. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. This combination positions Howmet well for outperformance, so growth investors may want to bet on it. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Howmet Aerospace Inc. (HWM) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Yahoo
an hour ago
- Yahoo
Will Top-Line Improvement Benefit AppLovin's Q2 Earnings?
AppLovin Corporation APP is set to announce its second-quarter 2025 results on Aug 6, after the bell. The company is expected to report strong year-over-year revenue growth, primarily driven by the strength of its Advertising segment. The consensus estimate for the Advertising revenues is pegged at $1.23 billion, indicating 72% year-over-year growth. This surge is likely to have been fueled by the company's advanced Axon 2 technology, which enhances ad targeting and optimization. Since its debut, Axon 2 has radically enhanced AppLovin's ad performance, helping to quadruple advertising spend on its platform. The Zacks Consensus Estimate for AppLovin's total revenues is expected to reach $1.21 billion, indicating a robust 12.3% increase from the year-ago quarter. AppLovin Corporation Price and EPS Surprise AppLovin Corporation price-eps-surprise | AppLovin Corporation Quote Profitability is also anticipated to have improved significantly. The consensus estimate for Advertising's adjusted EBITDA is pegged at $1000 million, implying 92.3% year-over-year growth. Earnings per share are expected to show a massive 123.6% increase, with the Zacks Consensus Estimate at $1.99. These projections highlight AppLovin's ability to capitalize on its technology-driven business model, reinforcing its position as a leading player in the digital advertising and gaming industries. APP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Earnings Snapshot Fiserv, Inc. FI reported mixed second-quarter 2025 results, wherein earnings beat the Zacks Consensus Estimate, but revenues missed the same. FI's adjusted EPS of $2.47 topped the consensus mark by 2.5% and rose 16% year over year. Adjusted revenues of $5.2 billion missed the consensus estimate by a slight margin but gained 1.7% on a year-over-year basis. The Interpublic Group of Companies, Inc. IPG reported impressive second-quarter 2025 results. Both earnings and revenues beat the Zacks Consensus Estimate. IPG's adjusted earnings of 75 cents per share surpassed the Zacks Consensus Estimate by 36.4% and jumped 23% from the year-ago quarter. Revenues before billable expenses (net revenues) of $2.2 billion beat the consensus estimate by a slight margin but declined 19.8% year over year. Total revenues of $2.5 billion decreased 7.2% year over year but outpaced the Zacks Consensus Estimate of $2.2 billion. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Interpublic Group of Companies, Inc. (The) (IPG) : Free Stock Analysis Report AppLovin Corporation (APP) : Free Stock Analysis Report Fiserv, Inc. (FI) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
an hour ago
- Yahoo
VNT vs. DUOL: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Technology Services sector might want to consider either Vontier Corporation (VNT) or Duolingo, Inc. (DUOL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out. There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits. Right now, Vontier Corporation is sporting a Zacks Rank of #2 (Buy), while Duolingo, Inc. has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VNT is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors. Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels. The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value. VNT currently has a forward P/E ratio of 12.82, while DUOL has a forward P/E of 117.01. We also note that VNT has a PEG ratio of 1.37. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DUOL currently has a PEG ratio of 2.60. Another notable valuation metric for VNT is its P/B ratio of 4.9. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, DUOL has a P/B of 17.22. Based on these metrics and many more, VNT holds a Value grade of B, while DUOL has a Value grade of F. VNT stands above DUOL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VNT is the superior value option right now. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Vontier Corporation (VNT) : Free Stock Analysis Report Duolingo, Inc. (DUOL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
