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- Build-A-Bear is growing at record levels and expanding its profit margins. Capital profits started flowing.
- Analysts are interested in the stock and expect it to rise at least 50%.
- A move to new highs is critical for this market and could lead to multi-year price increases and price doubling.
Build-A-Bear Workshop Inc (NYSE:) is an iconic brand with timeless products that resonate with consumers. If you’re looking for a comprehensive guide to the past and future of Build-A-Bear stock, this is it. . This article takes you on a journey that begins with the company’s founding, rise to fame, IPO, and ends with business and stock price outlook. Ultimately, it should become clear that this company specializes in bear markets, but is building bull markets for investors. The only question is how far stocks will go and how long it will take the market to get there.
Build-A-Bear: The Furry Revolution in Retail and Inventory Analytics
Build-A-Bear Workshop was founded on a dream. Maxine Clark, former president of Payless ShoeSource, quit her job to pursue her dream. She founded her Build-A-Bear Workshop in 1997 after test-marketing her own concept. The test also included two of her other concepts presented to the children, with Build-A-Bear winning. Fortunately, Build-A-Bear’s high profit margins made the decision easy. These profits allowed Mr. Clark to expand his business faster than he originally planned.
The company had nearly 20 locations within its first few months of operation due to its high-volume and high-margin business. These stores doubled the average sales per square foot of mall-based retailers and attracted investment from his private equity firm because of the profits. Along the way, the company filed more than a dozen lawsuits protecting its patents and trademarks, forcing many potential competitors to withdraw.
Today, Build-A-Bear Workshop is the market leader in DIY stuffed animals. The company is the largest carrier and has few direct competitors. Anyone who wants to make a bear should go to Build-A-Bear.
Is Build-A-Bear publicly traded?
The IPO came quickly for this company. It was introduced to the general market in 2004 and became a huge success just seven years after its release. The initial price rose as the IPO approached, and the first trade was considered a success as it reached the high end of the range.
Unfortunately, like many other companies, years of growth were priced into the IPO, and the market quickly came under pressure. The BBW market fell more than 95% from high to low, to about $34.55, and finally bottomed out in 2020, nearly 20 years after the first trade.
Market Performance and Financial Overview: Build-A-Bear Stock Analysis
2018 was a pivotal year for the brand. A failed marketing gimmick turned into a treasure trove of public awareness that has kept the business growing ever since. The company offered to make children pay for their bears based on their age, and attracted so many customers from all over the world that it became difficult to operate. Unable to meet the demand, they distributed vouchers to those waiting, helping to reduce the damage. It took some time for our business to recover, but we are now seeing steady growth.
Can I buy stock at Build-a-Bear?
You can buy stock at Build-A-Bear. The question is whether you should. Considering the trends, it seems like a good buy. The company is growing revenue at record levels, with growth expected to accelerate in 2024, and margins are expanding. His operating margin at the end of the second quarter of 2023 was nearly 10%, more than double that of major toy makers Hasbro (NASDAQ:) and Mattel (NASDAQ:).
As seen in our 2023 results, growth and leverage have resulted in solid cash flow, contributing to our strong balance sheet. Details beyond 2023 include doubling cash and what executives described as “comfortable” inventory levels. Leverage is almost zero.
Stock prices bottomed out in 2020, coinciding with the coronavirus-related market decline. Already significantly undervalued, the stock has since rebounded strongly, rising more than 1,700% from 2022 to date. The stock trades at nearly 6.5 times earnings due to solid cash flow and growth prospects, so it could rise another 4 times if the price-to-earnings ratio expands. Hasbro and Mattel trade at more than double their valuations.
Strategic Initiatives and Expansion Plans: Impact on Build-A-Bear Stock Price
Build-A-Bear’s strategic plan focuses on two avenues: expanding addressable markets and new stores. The number of stores is expected to increase by 30 stores in 2024, an increase of nearly 6% on top of the 6% increase in 2024, and is expected to continue expanding domestically and overseas in 2025.
The company expands its addressable market by offering new products with timeless appeal. Products are based on licensing agreements with leading and in-demand toy brands, media brands, designers and accessory manufacturers. Among the business success factors are upselling opportunities such as scents, sounds, clothing, and accessories.
Other signs of improving market size include the success of the Axolotl toy, Bear Leave Bear, and pet product lines among pre-teens and teenagers. Bear-lieve Bear is an interactive bear that comes to life with touch and voice commands. AI for toy lovers. The focus on pet products came after the company realized that a large portion of its accessories and clothing sales were going to pets. The pet market is expected to grow at a CAGR of mid-single digits over the next five years and has become a significant source of revenue.
Is Build-A-Bear a buy?
The factors that influence Build-A-Bear’s stock price are its balance sheet and return on capital. The balance sheet is a fortress with net cash and low leverage, providing no red flags to investors and allowing for sustainable returns on capital.
Our capital return program is strong and includes share buybacks and dividends. Dividends remain volatile, so investors shouldn’t put their income toward stocks. The company started paying special dividends in 2021, when cash flow and balance sheet improvement proved difficult, but it has not yet paid a regular dividend. Regular dividend payments will begin soon, which could cause the stock price to rise significantly.
Share buybacks will become more regular, with the number of shares decreasing by more than 2% in 2023. The approval is worth approximately $25 million to investors in the 2024 calendar year, which is equivalent to 2023, and is likely to increase by the end of the year.
ESG (Environmental, Social, Governance) Factors and Corporate Responsibility: Build-A-Bear Stock Price Forecast Considerations
Build-A-Bear is an average company when it comes to ESG. Results from various ESG tracking websites show that the stock price is pegged as the industry average and slightly above the overall market average. Areas of concern include safety, fair labor and equality issues, but not to the extent that they impact market sentiment today.
Analyst forecasts and investment outlook for Bill-A-Bear stock
Build-A-Bear is a highly undervalued stock trading at just 6.5 times 2024 earnings estimates, with growth, earnings, and broader margins projected. This value is amplified by analyst sentiment, which is pegged at Buy and expects the stock to rise by double digits.
MarketBeat only tracks the three analysts covered, but their activity is worth noting, as all reports are published in late 2023 and include two coverage that began. Jeffries Financial Group and Northland Securities initiated coverage with a consensus Buy/Strong Buy and a target near $38 just prior to the Q3 release.
What is the target price for Build-A-Bear stock?
Build-A-Bear’s price target is solid, suggesting the stock could rise at least 50%. This matches the minimum target announced by analysts, with the maximum target adding an additional 1,000 basis points. The company is starting to attract new coverage, so it’s likely that more analysts will begin and issue revisions as the year progresses.
Analyst price targets are important because their lower bounds coincide with all-time highs. The consensus and high end will be a new all-time high. A break above the $36 floor would indicate a potential market pivot and a move well above the current high price target.
Fundamental technical objectives include reliable predictions based on the size and extent of the bull market ahead of a breakout. This move is worth about $34.50 and has a target of $70.50. The move is also worth 2300% and the maximum price target is set at $864. While $864 seems unlikely, a combination of growth, margin expansion, cash flow, dividends, and share buybacks will get us there over time.
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