BBW Build A Bear Workshop Inc

Think you're too old for a teddy bear? Think again. Build-A-Bear Workshop, Inc. (BBW) has been absolutely on fire. But, is there still time to get into this Zacks #1 Rank (Strong Buy)?

Company Description

Build-A-Bear offers customizable stuffed animals. The interactive experience allows customers to build the stuffed animal online or at any of the more than 400 locations worldwide.

Surprise Profit

Analysts were expecting Build-A-Bear to post a 2-cent loss on Oct 27, but the company easily topped forecasts with a 5-cent profit. While the top line did dip slightly, to $96 million, net income increased $2.25 million, to a profit of $0.85 million.

Retail sales were up during the period but they did see a decline in licensing fees. But, licensing is a very small portion of the business model, contributing just $1.2 million to the top line in the third quarter.

Analysts Turn on a Dime

A month ago the Zacks Consensus Estimate was calling for a loss of $0.09 this year. But, thanks to upward revisions by all 3 analysts, EPS is expected to come in at a $0.06 profit.

Next year's average projection rose 10 cents, to $0.35. Given the nickel BBW brought in last year, analysts are expecting earnings to increase 600% by the end of 2012.

Valuations

As with many small caps, especially those transitioning into profitability, the valuations are a bit tricky. Most would balk at the triple digit P/E ratio. But with shares trading at less than book value and a price to sales of 0.3, there is some value here.

The Chart

Shares of BBW did surge on the earnings report. And that was after a very strong month leading up to the announcement. But take a look at the volume levels since the surprise. Even at this seemingly high level there are still plenty of buyers out there.