BBW - At A P/E Ratio Of 6 Build-A-Bear Should Consider Engaging In Massive Buybacks

2024-01-23 15:47:23 ET

Summary

• The BBW stock is very cheap; I believe management should initiate a massive buyback program.
• With buybacks, EPS growth could potentially reach the mid-teens.
• At 6 times earnings, we have a high ROCE company at a genuinely cheap price.
• Despite weak guidance, the stock is a strong buy.
• The CEO is selling shares; it's worth watching closely.

My Thesis

Back in November, I wrote an article delving into Build-A-Bear Workshop's ( BBW ) business, concluding it was a strong buy. Since then, Q3 earnings were published with weak guidance, causing the stock to drop 15%. However, I don't think the thesis has changed; in fact, it has strengthened as the price is much lower, and the stock is very cheap. I think it is a good time to revalue the company, given that the business has shown weakness....

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