Fantastic quarterly results released by Build-A-Bear Workshop
What’s more, with this positive momentum having carried over into the current year and interest for its brand only likely to continue to increase on the back of its recently released digital game, Build-A-Bear Tycoon, on Roblox (which is already closing in on 4 million engagements) and a number of additional aces the company has up its sleeves—like a Build-A-Bear documentary with award-winning documentarian Taylor Morden that is launching this year and the development of an animated film called Glisten and the Merry Mission based on its holiday plush star Glisten the snow deer that is slated for the 2023 holiday season—BBW thinks it can grow revenues by another 5-7% from the record $467.9 million achieved last year in 2023. Even the low end of the revenues of $491.3-500.7 million this implies is comfortably ahead of the Street’s $485.6 million forecast. And with freight costs expected to come down even further, the company sees pre-tax income growing by an even larger 10-15%. When you also apply BBW’s expected tax rate of 25%, the midpoint of this outlook suggests earnings per share of about $3.54, which is roughly 10% higher than the Street’s view of $3.21.
Build-A-Bear Workshop (BBW) is one of the stocks recommended in our market-beating investment newsletter, Forbes Investor. To find more beaten down, undervalued stocks with significant upside like BBW, try Forbes Investor here.
But what really underscores just how confident BBW is in its prospects for the coming year, is the fact that it concurrently announced that it will be paying out a special dividend of $1.50 per share on April 6, 2023, to all stockholders of record as of March 23, 2023. While this amounts to a payout of a little over $22 million, the company has cash to spare given that it began fiscal 2023 with no debt and cash of $42.2 million and its guidance calls for the production of nearly $50 million in additional free cash flow this year. If it continues to deliver on these goals as I expect, I see further upside for the stock ahead. Just be mindful that once this special dividend is paid, the value of your stock will fall by the same $1.50 to reflect this transfer in value.
Julius Juenemann, CFA is the equity analyst and associate editor of the Forbes Special Situation Survey and Forbes Investor investment newsletters. Build-A-Bear Workshop (BBW) is a current recommendation in the Forbes Investor. To access this and the other stocks being recommended through the Forbes Investor, click here to subscribe.
Source: https://www.forbes.com/sites/investor-hub/2023/03/09/what-recession-build-a-bear-workshop-bbw-continues-to-fire-on-all-cylinders/