Will Build-A-Bear's Balance Sheet Strength Fuel More Buybacks?

Build-A-Bear Workshop, Inc.’s BBW balance sheet strength provides it with enough headroom to continue aggressive buybacks. BBW ended the second quarter of fiscal 2025 with $39.1 million in cash, cash equivalents and restricted cash. This was up 55.4% compared to the prior-year period, while maintaining a debt-free position and unused revolving credit facility. 

During the first half of 2025, $13.1 million was returned to shareholders through dividends ($5.8 million) and stock repurchases ($7.3 million), supported by strong operating cash flow and margin expansion. Since the end of the second quarter through Aug. 27, BBW has repurchased shares worth $1.6 million. The company still has roughly $80.3 million remaining under its $100 million repurchase authorization announced last September. 

CFO Voin Todorovic emphasized that the robust cash generation and absence of leverage enhance flexibility to pursue both shareholder returns and long-term investments. 

Free cash flow strength has been a defining feature of Build-A-Bear’s financial story, benefiting from its asset-light operating model, steady profitability and disciplined expense management. With record pretax income and expanding EBITDA margins, the company’s ability to self-fund capital priorities remains solid. Pre-tax income was up 32.7% to $15.3 million, with pre-tax margin expanding 200 basis points to 12.3% from the prior-year quarter.

Given its historical capital discipline, Build-A-Bear’s fortified balance sheet appears well-positioned to sustain an active buyback cadence, reinforcing management’s confidence in the company’s intrinsic value.

What Latest Metrics Say About Build-A-Bear

Build-A-Bear, which competes with Walmart Inc. WMT and Target Corporation TGT, has surged 66.3% over the past year, outperforming the industry’s growth of 2.9%. While shares of Walmart have rallied 25%, Target has declined 45.7% in the aforementioned period.
 

From a valuation standpoint, Build-A-Bear's forward 12-month price-to-earnings ratio stands at 14.17, lower than the industry’s ratio of 17.45. BBW carries a Value Score of B.

Build-A-Bear is trading at a discount to Walmart (with a forward 12-month P/E ratio of 36.14) but at a premium to Target (11.02). 
 

The Zacks Consensus Estimate for Build-A-Bear's current financial-year sales and earnings per share implies year-over-year growth of 7.4% and 6.9%, respectively. 
 

Build-A-Bear currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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