Is Now An Opportune Moment To Examine Build-A-Bear Workshop, Inc. (NYSE:BBW)?

While Build-A-Bear Workshop, Inc. (NYSE:BBW) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$47.94 at one point, and dropping to the lows of US$36.09. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Build-A-Bear Workshop's current trading price of US$36.09 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Build-A-Bear Workshop’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Build-A-Bear Workshop

What Is Build-A-Bear Workshop Worth?

According to our valuation model, Build-A-Bear Workshop seems to be fairly priced at around 15% below our intrinsic value, which means if you buy Build-A-Bear Workshop today, you’d be paying a fair price for it. And if you believe that the stock is really worth $42.45, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Build-A-Bear Workshop’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Build-A-Bear Workshop look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 6.5% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Build-A-Bear Workshop, at least in the short term.

What This Means For You

Are you a shareholder? BBW’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on BBW, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. In terms of investment risks, we've identified 1 warning sign with Build-A-Bear Workshop, and understanding it should be part of your investment process.

If you are no longer interested in Build-A-Bear Workshop, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.