Build-A-Bear Workshop is A Strong Performer with More Upside Potential

Photo of author
Written By Joel Gbolade

Build-A-Bear Workshop (NYSE: BBW) stock has surged over 30% year-to-date, outperforming all major stock indexes. This performance is driven by three consecutive years of revenue and profit growth, stock buybacks, special dividends, and record-breaking gross margin at 54.39% and operating margin at 13.47%.

Potential for Further Growth

Despite the recent run-up in the stock price, there appears to be more room for upside. The company’s strong growth in high-margin segments and shift to e-commerce play a crucial role.

A discounted cash flow analysis suggests BBW is worth roughly $41.34 per share, representing a potential 43% upside from the current $30.00 per share.

Company Overview

Build-A-Bear Workshop (BBW) offers customers the chance to buy a stuffed animal and customize it with clothing, shoes, sounds, scents, glasses, and other items.

Customers even receive a birth certificate for their customized stuffed animals. The company operates 369 corporately managed stores, 92 third-party stores, and 74 international stores, along with two e-commerce sites.

Credits: DepositPhotos

In 2023, the average price per transaction at BBW was $50.59, up by approximately 43% since 2013, which is higher than the typical inflation rate of 2%. BBW commands premium pricing due to its unique offerings, unmatched by competitors at the same scale.

The company is also expanding internationally with stores in South Africa, China, Australia, Chile, and several Gulf states such as Kuwait and Dubai.

Growth Opportunities

BBW has two main avenues of growth: the commercial segment and e-commerce sales. The commercial segment, which includes revenue from transactions with other businesses (mainly wholesale activities and licensing intellectual properties), has grown significantly.

It represents around 5% of sales, up from 2.08% in FY2022. This segment has seen a 61% sales increase in FY2023 and 37.2% in FY2024, more than doubling over the past three years. Third-party stores have experienced the highest net openings, with 22 new openings and no closures in FY2024.

The commercial segment’s partners include wholesalers, cruise liners, airports, and resorts, which help distribute products to various markets and customer segments, potentially driving incremental sales. Partnering with high-traffic enterprises can expose the BBW brand to potential customers at no additional cost.

BBW’s shift to e-commerce is another growth avenue. The company has tripled its online sales since 2018 by offering exclusive online offers and through loyalty programs. While there was a 4% e-commerce decline in the latest quarter, this is seen as transitory, given the recent creation of the Chief Customer & Digital Officer position to enhance the digital strategy.

Investment Thesis

The investment thesis for BBW is based on strong financials, a solid product with premium pricing, and room for growth.

BBW’s growth in high-margin segments and low capital expenditures (3.3% of revenue) have more than doubled its free cash flow over the past three years. EBITDA and EBIT margins have increased by 100 and 110 basis points, respectively.

The company has a strong balance sheet with low leverage, strong working capital, and solid liquidity.

Macroeconomic Risks Ahead

However, BBW faces several macroeconomic risks, including high inflation, which pressures consumer spending. Another pandemic could also pose a significant challenge, as seen when the stock declined to $0.90 in 2020.

Credits: DepositPhotos

While competition is a concern, no other company offers the same scale and customization options as BBW.

High Potential Investment Opportunity

BBW is a simple business with great product offerings. The customer base is stable, with 80% being homeowners earning between $100,000 and $150,000. The company is financially healthy, has room for growth, and is trading at an attractive valuation.


You should read and understand this disclaimer in its entirety before joining or viewing the website or email/blog list of (the “Publisher”). The information (collectively the “Advertisement”) disseminated by email, text or other method by the Publisher including this publication is a paid commercial advertisement and should not be relied upon for making an investment decision or any other purpose. The Publisher is engaged in the business of marketing and advertising the securities of publicly traded companies in exchange for compensation. The track record, gains, upside, and/or losses mentioned in the Advertisement, if any, should not be considered as true or accurate or be the basis for an investment. The Publisher does not verify the accuracy or completeness of any information included in the Advertisement. While the Publisher does not charge for the SMS service, standard carrier message and data rates may apply. To unsubscribe from receiving promotional text messages to your phone sent via an autodialer, using your phone reply to the sender’s phone number with the word STOP or HELP for help.

The Advertisement is not a solicitation or recommendation to buy securities of the advertised company. An offer to buy or sell securities can be made only by a disclosure document that complies with applicable securities laws and only in the states or other jurisdictions in which the security is eligible for sale. The Advertisement is not a disclosure document. The Advertisement is only a favorable snapshot of unverified information about the advertised company. An investor considering purchasing the securities, should always do so only with the assistance of his legal, tax and investment advisors. Investors should review with his or her investment advisor, tax advisor or attorney, if and to the extent available, any information concerning a potential investment at the web sites of the U.S. Securities and Exchange Commission (the "SEC") at; the Financial Industry Regulatory Authority (the "FINRA") at, and relevant State Securities Administrator website and the OTC Markets website at The Publisher cautions investors to read the SEC advisory to investors concerning Internet Stock Fraud at, as well as related information published by the FINRA on how to invest carefully. Investors are responsible for verifying all information in the Advertisement. As an advertiser, we do not verify any information we publish. The Advertisement should not be considered true or complete.

The Publisher does not offer investment advice or analysis, and the Publisher further urges you to consult your own independent tax, business, financial and investment advisors concerning any investment you make in securities particularly those quoted on the OTC Markets. Investing in securities is highly speculative and carries an extremely high degree of risk. You could lose your entire investment if you invest in any company mentioned in the Advertisement. You acknowledge that we are not an investment advisory service, a broker-dealer or an investment adviser and we are not qualified to act as such. You acknowledge that you will consult with your own independent, tax, financial and/or legal advisers regarding any decisions as to any company mentioned here. We have not determined if the Advertisement is accurate, correct or truthful. The Advertisement is compiled from publicly available information, which include, but are not limited to, no cost online research, magazines, newspapers, reports filed with the SEC or information furnished by way of press releases. Because all information relied upon by us in preparing an advertisement about an issuer comes from a public source, it is not reliable, and you should not assume it is accurate or complete.

By your subscription to our profiles, the viewing of this profile and/or use of our website, you have agreed and acknowledged the terms of our full disclaimer and privacy policy which can be viewed at the following link: and

By accepting the Advertisement, you agree and acknowledge that any hyperlinks to the website of (1) a client company, (2) the party issuing or preparing the information for the company, or (3) other information contained in the Advertisement is provided only for your reference and convenience. The advertiser is not responsible for the accuracy or reliability of these external sites, nor is it responsible for the content, opinions, products or other materials on external sites or information sources. If you use, act upon or make decisions in reliance on information contained in any disseminated report/release or any hyperlink, you do so at your own risk and agree to hold us, our officers, directors, shareholders, affiliates and agents harmless. You acknowledge that you are not relying on the Publisher, and we are not liable for, any actions taken by you based on any information contained in any disseminated email or hyperlink.