Critical Comparison: Winmark (NASDAQ:WINA) and Build-A-Bear Workshop (NYSE:BBW)

Build-A-Bear Workshop (NYSE:BBW) and Winmark (NASDAQ:WINA) are both small-cap retail/wholesale companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, analyst recommendations, valuation, risk and profitability.

Insider & Institutional Ownership

79.3% of Build-A-Bear Workshop shares are held by institutional investors. Comparatively, 73.3% of Winmark shares are held by institutional investors. 5.8% of Build-A-Bear Workshop shares are held by company insiders. Comparatively, 10.1% of Winmark shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Build-A-Bear Workshop pays an annual dividend of $0.88 per share and has a dividend yield of 1.7%. Winmark pays an annual dividend of $3.84 per share and has a dividend yield of 1.0%. Build-A-Bear Workshop pays out 21.2% of its earnings in the form of a dividend. Winmark pays out 34.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Build-A-Bear Workshop has increased its dividend for 1 consecutive years and Winmark has increased its dividend for 5 consecutive years. Build-A-Bear Workshop is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Build-A-Bear Workshop and Winmark”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Build-A-Bear Workshop	$496.40 million	1.40	$51.78 million	$4.16	12.67
Winmark	$81.29 million	16.39	$39.95 million	$11.23	33.42

Build-A-Bear Workshop has higher revenue and earnings than Winmark. Build-A-Bear Workshop is trading at a lower price-to-earnings ratio than Winmark, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Build-A-Bear Workshop has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500. Comparatively, Winmark has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Profitability

This table compares Build-A-Bear Workshop and Winmark’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Build-A-Bear Workshop	10.91%	40.74%	18.98%
Winmark	49.48%	-98.49%	103.78%

Analyst Recommendations

This is a breakdown of current recommendations for Build-A-Bear Workshop and Winmark, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Build-A-Bear Workshop	0	0	3	0	3.00
Winmark	0	0	0	0	0.00

Build-A-Bear Workshop presently has a consensus price target of $51.33, suggesting a potential downside of 2.63%. Given Build-A-Bear Workshop’s stronger consensus rating and higher probable upside, analysts plainly believe Build-A-Bear Workshop is more favorable than Winmark.

Summary

Build-A-Bear Workshop beats Winmark on 10 of the 17 factors compared between the two stocks.

About Build-A-Bear Workshop

Build-A-Bear Workshop, Inc. operates as a multi-channel retailer of plush animals and related products in the United States, Canada, the United Kingdom, Ireland, and internationally. The company operates through three segments: Direct-to-Consumer, Commercial, and International Franchising. Its merchandise comprises various styles of plush products to be stuffed, pre-stuffed plush products, and sounds and scents that can be added to the stuffed animals, as well as range of clothing, shoes and accessories, and other toy and novelty items, including family sleepwear. The company operates its stores under the Build-A-Bear Workshop brand name; and sells its products through its e-commerce sites and third-party marketplace sites. Build-A-Bear Workshop, Inc. was founded in 1997 and is headquartered in Saint Louis, Missouri.

About Winmark

Winmark Corporation, a resale company operates as a franchisor for small business in the United States and Canada. The company franchises retail stores concepts that buy, sell and trade merchandise. It also operates middle-market equipment leasing business. In addition, the company buys and sells used clothing and accessories geared toward the teenage and young adult market under Plato’s Closet brand; and operates stores which buys and sells used and new children’s clothing, toys, furniture, equipment, and accessories primarily to parents of children ages infant to 12 years under the Once Upon A Child brand. Further, it buys, sells, trades in, and used and new sporting goods, equipment, and accessories for various athletic activities including team sports, such as baseball/softball, hockey, football, lacrosse, and soccer, as well as fitness, ski/snowboard, golf, and others under the Play It Again Sports brand; and buys and sells used women’s apparel, shoes, and accessories under the Style Encore brand. Additionally, the company buys, sells, trades in, and used and new musical instruments, speakers, amplifiers, music-related electronics, and related accessories under the Music Go Round brand. Winmark Corporation was incorporated in 1988 and is headquartered in Minneapolis, Minnesota.