Build-A-Bear (BBW) Q3 2026: 11.3% Net Margin Strengthens Bullish Valuation Narrative

Build-A-Bear Workshop (BBW) has reported another busy stretch, with Q2 2026 revenue of about $124 million and basic EPS of $0.94, following Q1 2026 revenue of roughly $128 million and basic EPS of $1.17 as the company continues to cycle strong results from late 2025, when Q4 revenue was around $150 million and EPS reached $1.63. Over the last year, trailing twelve month revenue has climbed from approximately $480 million to $523 million and EPS has moved from $3.49 to $4.48. This sets up the latest release against a backdrop of expanding profitability and tighter margins discipline that investors will be watching closely.

See our full analysis for Build-A-Bear Workshop.

With the headline numbers on the table, the next step is to see how this earnings trajectory lines up with the most widely held narratives around Build-A-Bear's growth, profitability, and long term story.

See what the community is saying about Build-A-Bear Workshop

Margins Hold Above 11.3 Percent

• Trailing twelve month net income of about $59.2 million on $522.5 million of revenue translates into an 11.3 percent net margin, up from 10.4 percent a year earlier.
• Bulls point to this margin strength as proof that the experiential model can absorb cost pressures. However, the consensus narrative also flags rising tariffs and labor costs as headwinds, which means:
  • The recent 18.3 percent earnings growth over the last year supports the idea that pricing and mix are still working, even as those costs start to bite.
  • At the same time, analysts expect profit margins to ease back to around 10.6 percent in three years, so the bullish case assumes the brand and format stay compelling enough to keep margins from sliding faster.

Analysts watching the spread between today’s 11.3 percent net margin and the projected 10.6 percent are debating how durable Build A Bear’s experiential model really is under rising tariff and wage pressures. 🐂 Build-A-Bear Workshop Bull Case

Growth Slows From 27.9 Percent Pace

• Earnings have grown 18.3 percent over the last year, which is solid but noticeably below the 27.9 percent per year growth rate seen over the past five years.
• Bears argue this deceleration plus modest forecasts of about 5.9 percent annual earnings growth and 4.0 percent annual revenue growth show the business is maturing. The consensus narrative also adds several structural risks that could limit a reacceleration:
  • Heavy dependence on mall and tourist traffic, along with the long term shift toward digital entertainment, makes it harder to repeat the last five years of 27.9 percent annual earnings growth.
  • Expected tariff and labor headwinds, including cited impacts in 2025, could keep earnings growth closer to that mid single digit forecast even if new products and international partners perform well.

Skeptics see the drop from a 27.9 percent five year earnings pace to 18.3 percent in the last year as a sign that structural headwinds may be catching up with Build A Bear’s growth story. 🐻 Build-A-Bear Workshop Bear Case

Valuation Screens Cheap Versus DCF

• With the stock at $48.48 and a DCF fair value estimate of about $75.73, shares trade roughly 36 percent below that DCF fair value and at a 10.5 times trailing P E, compared with about 18.5 times for the US specialty retail industry and 62.9 times for peers.
• Supporters highlight this discount plus analysts’ view of continued, if slower, growth as a valuation driven opportunity, while the consensus narrative still warns that slower 4.0 percent revenue and 5.9 percent earnings growth versus the broader US market could limit how quickly that gap closes:
  • The low P E multiple gives room for re rating if the company can keep net margins near the current 11.3 percent rather than drifting down toward the projected 10.6 percent.
  • However, because forecast growth trails wider market expectations, any move toward the DCF fair value of $75.73 may depend more on steady execution than on a sudden growth surprise.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Build-A-Bear Workshop on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

See the numbers from another angle and want your view reflected in the story? Shape your own narrative in minutes, Do it your way.

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding Build-A-Bear Workshop.

See What Else Is Out There

Build A Bear’s slowing earnings and revenue growth, combined with forecast margin compression, suggest its strongest expansion years may be behind it for now.

If that deceleration makes you uneasy, use our stable growth stocks screener (2078 results) to quickly focus on businesses delivering steadier revenue and earnings progress across cycles, so your portfolio feels more predictable.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com