QS Research · Michael Burry's Scion Capital analyst template · 2006
BUILD-A-BEAR WORKSHOP INC (BBW)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -14% · upside +16%
At $29.70 (N1), the TTM to Aug 1, 2026 base is $82.4M EBITDA (N15), $51.6M net income to common (N16) and $24.5M FCF (N19); the quoted 4.3x EV/EBITDA (N27) and 7.1x P/E (N30) already capitalise that TTM base at today's price. Holding the company's own 4.3x multiple, a guided adjusted-EBITDA downside of about $70M values equity at about $315M, or about $25.6/share (-13.9%), while about $95M upside EBITDA gives about $422M equity, or about $34.3/share (+15.5%). Section 13's $59-$69 upside uses 8.7x-10.2x peer EV/EBITDA; I do not use it because no cited non-valuation catalyst justifies a rerate, and cash flow is weaker than EBITDA: TTM buybacks of $37.6M plus dividends of $11.5M exceed $24.5M FCF (N19, N20, N21). This is a watch, not a long: the stock is statistically cheap and heavily shorted, but guidance has been cut twice and the 4.3x earnings multiple already reflects a challenged FY2026.
Key numbers
- Share price: $29.70
- Market cap: $365.9M
- Latest financial period: TTM to Aug 1, 2026
- Revenue (TTM): $517.8M
- EV / EBITDA (TTM): 4.3x
- P/E (TTM): 7.1x
- Price / book: 2.30x
The 15 boxes
- ✓ 1. Long-form business notes
BBW is a 1997-founded experiential plush retailer that now runs three reportable segments (DTC, commercial, international franchising) through corporately-managed, partner-operated, franchise, e-commerce and wholesale channels. At January 31, 2026 it had 662 global locations, with growth increasingly via asset-light partner and franchise units; FY2025 net new units were 64. The six-year XBRL shows revenue rising from $255.3M in FY2021 to $529.8M in FY2026 and operating cash flow from $13.4M to $65.1M, while capex and buybacks also rose. The annual business sections show a shift from Covid-era digital/liquidity priorities to a four-pillar growth plan adding wholesale/outbound licensing and gifting/personalization.
- ✓ 2. Competitive advantage
BBW's advantage is narrow and brand/experience-based, not structural: the 10-K calls its store format one of "limited direct competition" among make-your-own stuffed-animal operators, but it competes indirectly with Jellycat, Hasbro, Mattel, Lego, Pop Mart, Amazon and Target, and for leisure dollars with movie theatres, arcades and party venues. The numbers show a real but modest franchise: gross profit rose from $245.9M (FY2023) to $295.6M (FY2026) on revenue of $467.9M to $529.8M (margin ~52.6% to ~55.8%, computed from S28), yet pre-tax income went only from $61.9M to $67.2M over the same three years, so incremental gross margin was absorbed by costs, and the 10-K itself flags "low barriers to entry" and better-resourced competitors. The licensed brands that drive traffic (Sanrio, Disney, Pokémon, Nintendo) sit in limited-term contracts terminable on notice, so the strongest pull on customers is not owned by BBW.
- ✓ 3. 10-Q takeaways
Q2 FY2026 was weak: total revenue fell 7.2% to $115.3 million and pre-tax income fell to $11.6 million from $15.3 million, with retail gross margin down 360 bps on occupancy deleverage and promotions. First-half pre-tax was $35.5 million, but excluding the $7 million prior-year IEEPA refund, adjusted pre-tax was $28.5 million. Management lowered FY2026 revenue to $500-$525 million and pre-tax to $60-$68 million, while cash fell to $14.0 million and buybacks/dividends continued.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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