Build-A-Bear Workshop Inc. Stock Downgraded (BBW)

NEW YORK ( TheStreet) -- Build-A-Bear Workshop (NYSE: BBW) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Despite the fact that BBW's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.63 is low and demonstrates weak liquidity.
  • 48.90% is the gross profit margin for BUILD-A-BEAR WORKSHOP INC which we consider to be strong. Regardless of BBW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BBW's net profit margin of -7.50% significantly underperformed when compared to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 208.6% when compared to the same quarter one year ago, falling from $8.28 million to -$8.99 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, BUILD-A-BEAR WORKSHOP INC's return on equity significantly trails that of both the industry average and the S&P 500.
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Build-A-Bear Workshop, Inc. operates as a specialty retailer of plush animals and related products. The company's merchandise comprises of various styles of animals to be stuffed; clothing, shoes, and accessories for the stuffed animals; and other brand appropriate toy and accessory items. Build-A-Bear Workshop has a market cap of $137.9 million and is part of the services sector and specialty retail industry. Shares are down 29.7% year to date as of the close of trading on Friday.

You can view the full Build-A-Bear Workshop Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet Ratings Staff
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