Recent Buy – L Brands, Inc. $LB

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Woohoo! I’m on the buying spree these days, unloading capital almost everyday. LOL 🙂 I wish, but since I still have a tons of free trades on my $WFC account, I figured, why not? Especially, I just keep buying down beaten down stocks.

Back to L Brands, Inc. ($LB) – It’s the parents company of Victoria Secrets and Baths and Body Works

I bought 10 shares of $LB at $34.xx, yielding at 6.6%, which gives me $24/year in additional dividends

From yahoo:

L Brands, Inc. operates as a specialty retailer of women’s intimate and other apparel, beauty and personal care products, home fragrance products, and accessories. The company operates in three segments: Victoria’s Secret, Bath & Body Works, and Victoria’s Secret and Bath & Body Works International. Its products include loungewear, bras, panties, athletic attire, shower gels and lotions, aromatherapy, body care, soaps and sanitizers, handbags, jewelry, and personal care accessories. The company offers its products under the Victoria’s Secret, PINK, Bath & Body Works, La Senza, Henri Bendel, C.O. Bigelow, White Barn, and other brand names. L Brands, Inc. sells its merchandise through company-owned specialty retail stores, which are primarily mall-based; through its Websites comprising VictoriasSecret.com, BathandBodyWorks.com, HenriBendel.com, and LaSenza.com; and through franchises, licenses, and wholesale partners. As of March 8, 2018, the company operated 3,071 company-owned specialty stores in the United States, Canada, the United Kingdom, Ireland, and Greater China, as well as sold its brands through approximately 800 franchised locations worldwide. The company was formerly known as Limited Brands, Inc. and changed its name to L Brands, Inc. in March 2013. L Brands, Inc. was founded in 1963 and is headquartered in Columbus, Ohio.

Why I bought $LB Brand?

#1 yield at 6.6% is nice.

#2 The easiest money to make is from women 🙂 As frugal as I am, I still go to Victoria’s Secret every 6 months to get my undergarment replacement. So, I figure, a more generous spender would go there and spend much more than I do. I can’t imagine a day that Victoria’s Secret stores close its door. It wouldn’t feel right … inside. hahah! LOL 🙂

#3

Beta 0.23
52-Week Change 3 -35.32%
S&P500 52-Week Change 3 10.37%
52 Week High 3 63.10
52 Week Low 3 34.01
50-Day Moving Average 3 37.27
200-Day Moving Average 3 46.83

 

Trailing P/E 10.00

Which is way less than S&P average of 20

trading is below the 50 days and 200 days moving average

35% off from its 52-week high.

**The last time the stock was down to $32.xx, it shows very strong supports and the stock was quickly rebounded. So, if it goes below $32/shares, I’ll quickly buy a few more shares for sure.

 

Risks:

#1 The #1 shareholder has threaten to take the company private. In that case, I might have to say goodbye to the 6.6% dividends

#2 Payout ratio is high at 70.18% If earnings doesn’t improve, this might stop the company from increasing its dividend

#3 Malls in America are becoming less popular, that’s where most $LB stores are located. Although the situation are improving with the mall, there are company that rents the big – huge – vacant – mall space as *Indoor Go-Cart *Indoor boucing house *Indoor Adult Daycare Center, etc. So, that would still draw customers into these mall that have super convenience parking space and such. Malls are closing at a lower pace since 2008.

Some Earning Highlights proving that company is still performing better in 2017 than 2016

L Brands’ net sales were $4.82 billion for the 14-week fourth quarter ended February 03, 2018, compared to $4.49 billion for the 13 weeks ended January 28, 2017. The Company’s comparable sales for the reported quarter grew 2% on a y-o-y basis. The extra week in FY17 represented approximately $160 million in sales. L Brands’ reported numbers were in-line with analysts’ estimates of $4.82 billion.

During Q4 2017, L Brands reported operating income of $986.6 million compared to $987.6 million in Q4 2016.

For Q4 2017, L Brands reported net income of $664.07 million, or $2.33 per diluted share, compared to $631.75 million, or $2.18 per diluted share, for Q4 2016

What do you think about my $LB buy? Are you taking a plunger too at $34.xx or waiting for it to drop further? Or The risks are way too high for you?

8 Comments

  1. According to our own stock screener, L Brands would currently almost make it on our watchlist. However, the share price is still a little bit too high for my personal risk appetite. I guess the price would have to fall below $30 per share before I change my mind.

    – David

    • I think you’re right at it might go below $30. In that case, I’ll buy more.
      One thing that $LB has going is there is a 17% insider holders. WEXNER LESLIE H. is the CEO and the largest individual shareholders, unless he changed his mind and something major happen, he’s not going to sell. If you look at AAPL, WFC, BAC, JPM, the insider shareholders are very tiny portion, of course these companies are huge. 🙂

  2. I will say you certainly love the contrarian point of view. Sold my LB at 49 and change on the way down and took the tax loss last year. Since then malls cratered, swim suit line exited, more competition from AMZN, rolling out a rebrand of at Home as White Barn and now weak guidance due to VS? The one positive I see is the strong brand. This one, in my book, remains a gamble.

    • I do think the swimsuit exited was a mistake. But it’s an easy fix if the demand is there.

      I haven’t had a bad experience going to VS. As a tomboy, I had a hard time accepting and embracing my feminine body, the girls at VS, even the high school student ones were super nice to me. For that, I think they have very good training and that hasn’t changed for the 20 some years that I’ve been shopping at VS.

      Maybe, they could make some small moves like Dove is making deodorant for men. LOL.

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