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L Brands, Looking Cheap, May Be a Good Fit Today

Victoria's Secret parent L Brands has a wide economic moat and is trading at an attractive discount.


Bridget Weishaar: L Brands is currently trading at about a 40% discount to our fair value estimate. We think this valuation coupled with a third-quarter inflection point makes this stock an attractive investment idea. 

In our opinion, L Brands possesses a wide economic moat and operates in a space where fit, function, and comfort are more valued than price. We view the anniversary of swim and apparel exits, as well as new bra product introductions in the back half of the year, as likely to provide a boost to both the top line and margin. Furthermore, we see China's long-term potential as capable of catapulting revenue growth back to the 3% to 4% range over time.

Bridget Weishaar does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.