Why Build-A-Bear Workshop (BBW) Stock Is Skyrocketing Today

NEW YORK (TheStreet) -- Build-A-Bear Workshop (BBW) shares are rising, up 19.5% to $13.41, following the release of the company's first quarter earnings.

The company reported net income of $5 million, or 29 cents per diluted share, easily beating analysts estimate of 11 cents.

The interactive entertainment company posted revenue of $97.9 million, slightly below analysts expectations of $98.7 million.

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TheStreet Ratings team rates BUILD-A-BEAR WORKSHOP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate BUILD-A-BEAR WORKSHOP INC (BBW) 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 solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that revenues have generally been declining."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 113.90% and other important driving factors, this stock has surged by 130.30% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • BUILD-A-BEAR WORKSHOP 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, BUILD-A-BEAR WORKSHOP INC continued to lose money by earning -$0.15 versus -$3.01 in the prior year. This year, the market expects an improvement in earnings ($0.27 versus -$0.15).
  • BBW has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Despite the fact that BBW's debt-to-equity ratio is low, the quick ratio, which is currently 0.66, displays a potential problem in covering short-term cash needs.
  • BBW, with its decline in revenue, slightly underperformed the industry average of 5.9%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength 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.
  • You can view the full analysis from the report here: BBW Ratings Report
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