"L Brands continues to execute extremely well on its 'focused, fast, and frugal' strategy that has been the secret to success, driving 20%+ average EPS growth for the last five years," analysts said.
The company is setting its sights on winning the "Retail Olympics" and competing with not just U.S. specialty retailers, but some of the best consumer branded companies in the world, the firm said.
Additionally, Bath & Body Works and Victoria Secret's PINK has outperformed other segments, according to the analyst note.
Based in Ohio, L Brands is an American fashion retailer. Its flagship brands include Victoria's Secret and Bath & Body Works.
On Monday, shares closed down 3.38% to $85.08.
Separately, TheStreet Ratings team rates L BRANDS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate L BRANDS INC (LB) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- L BRANDS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, L BRANDS INC increased its bottom line by earning $3.49 versus $3.05 in the prior year. This year, the market expects an improvement in earnings ($3.73 versus $3.49).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 59.2% when compared to the same quarter one year prior, rising from $157.00 million to $250.00 million.
- Powered by its strong earnings growth of 58.49% and other important driving factors, this stock has surged by 50.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- Net operating cash flow has significantly decreased to -$156.00 million or 75.28% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: LB Ratings Report