L Brands: Market Undervaluing The Victoria's Secret Spin-Off

Jun. 14, 2021 9:52 AM ETBath & Body Works, Inc. (BBWI)39 Comments
CashFlow Hunter profile picture
CashFlow Hunter
4.7K Followers

Summary

  • Victoria's Secret will be spun off sometime in August.
  • Sum of the two parts is significantly higher than current valuation.
  • Already announced buybacks will close the valuation gap.

Couple shopping at a clothing store and using facemasks during the pandemic
andresr/E+ via Getty Images

Basic Thesis

L Brands (LB) is separating its two businesses Victoria's Secret "VS" and Bath and Body Works "BBW". The separation will be a tax-free spinoff occurring in August.

On as-is basis, LB is trading at

This article was written by

CashFlow Hunter profile picture
4.7K Followers
Cash flow focused investor comfortable across the capital structure. Prefer to find undervalued steady cash flow generators on the long side and declining cash flow situations with unsustainable balance sheets on the short side.

Disclosure: I am/we are long LB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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