The average target price of VSCO is 23 and suggests 20% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 32.0. This translates into 66% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 15.0. This is equivalent to 22% downside potential in the worst case. 

Victoria's Secret & Co. operates as a specialty retailer of women's intimate, personal care, and beauty products worldwide. The company offers bras, panties, lingerie, sleepwear, loungewear, and athletic attire and swimwear, as well as fragrances and body care products, and accessories under the Victoria's Secret and PINK brands. As of March 2, 2022, it operated approximately 1,400 retail stores. The company was incorporated in 2021 and is headquartered in Reynoldsburg, Ohio.

Victoria's Secret & Co.

Consumer Cyclical

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

VSCO reported revenue of USD 6 222mn in the last 12 months, down 0% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 1% from FY24 to USD 2.00.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 48ppts and its growth decelerated by 15ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is slightly unfavourable.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 7.9% in the last 12 months, a decline from 9.1% in FY24. 

Historically, VSCO has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 2.7%, a growth from 2.7% in FY24. 

Victoria's Secret & Co. reported a return on equity (RoE) of 26.1% in the last 12 months, down from 31.3% in FY24. 

Another important profitability metric, return on assets (RoA), amounted to 3.7% in the last 12 months, an increase from 3.6% in FY24. 

In the last 12 months, the return on capital employed (RoCE) declined to 5.2%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.9 in the past several years. This ratio implies a poor shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

VSCO boasts very high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually very stable and remains extremely favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to slow historical revenue growth, bleak profitability, weak debt servicing capacity, and an unfavourable capital structure. We note solid return on capital, among the positive credit factors. 

In highly turbulent market conditions, VSCO is highly volatile. In other words, the stock will fall substantially more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be significant. 

In normal market circumstances, VSCO is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is undervalued relative to its peers. Specifically, the stock is 'cheap' on P/E, neutral on EV/EBITDA, underpriced on P/FCF. 

Victoria's Secret & Co.

$ 18.88

4

Victoria's Secret & Co.

$ 18.88

4

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 18.88

About

About

Victoria's Secret & Co.

$ 18.88

4

Victoria's Secret & Co.

$ 18.88

4

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 18.88

About

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