r/valueinvesting
Love Me Some $BBW
BBW is deeply undervalued at $30 despite strong fundamentals, high margins, and a successful shift to an asset-light model.
- Strong balance sheet with no debt, $26M cash, and high 55% gross margins.
- Successful shift to an asset-light wholesale model growing at 25% annually.
- Deeply undervalued at 8x earnings, trading at $30 despite a proven track record of robust top-line growth.
- Long-time CEO recently stepped down, causing management transition concerns.
- Online sales have taken a hit compared to pandemic peaks, leading to marginal 2026 revenue guidance.
Build-A-Bear Workshop requires no introduction. If you grew up a red-blooded American, the brand recognition is automatic. Children (and increasingly adults) will claw their eyes out for one of their teddy bears.
This is a top of the line brand, a clean balance sheet (no debt, $26MM cash), and a $400MM market cap that will produce $50MM of Net Income this year (8x earnings)…
And the company has been killing it since 2021 - driven by a shift towards partnering with third party operators. While the company does have 376-owned stores (accounting for \~66% of profit), they started selling the teddy bears wholesale to third party operators, growing that segment from $4MM in 2020 to $38MM in 2025. 1/3 of their profit is now from an asset-light distribution model that is growing at 25% annually.
The stock has gotten tanked the last 6 months because their long-time CEO just stepped down to go be the CEO of Carter’s (much bigger company, big career move for her)… but her replacement is her right hand man who’s been the Company’s COO (and responsible for the company’s turnaround) for the last 10 years. More importantly, their online sales started taking a hit over the last year (compared against COVID peaks, but core revenue growth outpaced this), and 2026 guidance is only expecting marginal growth (after the company drove revenue from $255MM in 2021 to $500MM in 2025). Well guess what - the stock was priced for 0% growth at $75/share and is now trading as if it’s a retailer entering distress around $30/share, despite having a pristine balance sheet, eye-popping unit economics (55% gross margins!!), and a demonstrated track-record of robust top-line growth.
With a reasonable path towards 5% growth in the medium-term blended across distribution channels, I think a reasonable valuation of Build-A-Bear would be trade around 15x earnings (>150% upside in a conservative modeling scenario).
This $BBW position is the largest I’ve ever taken at 27% of my portfolio. Looking forward to coming back to this post in a few years!
Amen to that brothe.....oh crap this is for a stock.
Yeah, that's right, I like my stocks BBW
Yeah, type that wanna turn around and then share some divvies with you
i have not seen a teddy bear in literal years. Where the FUCK are these sales coming from?? Baby showers??
I've done a couple write ups on $BBW over the last couple of years, and started investing around $22.00. I'm currently adding to my position because I firmly believe the current market price is an overreaction.
some great assets there...
Nice 🙂