Comparing Michaels Companies (MIK) & Build-A-Bear Workshop (BBW)

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

Insider & Institutional Ownership

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75.8% of Build-A-Bear Workshop shares are held by institutional investors. 1.3% of Michaels Companies shares are held by insiders. Comparatively, 8.4% of Build-A-Bear Workshop shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Michaels Companies 7.28% -24.07% 18.67%
Build-A-Bear Workshop 2.21% 7.91% 4.38%

Risk and Volatility

Michaels Companies has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, Build-A-Bear Workshop has a beta of -0.35, meaning that its share price is 135% less volatile than the S&P 500.

Valuation and Earnings

This table compares Michaels Companies and Build-A-Bear Workshop’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Michaels Companies $5.36 billion 0.64 $390.49 million $2.17 8.72
Build-A-Bear Workshop $357.87 million 0.43 $7.91 million $0.53 18.11

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

Analyst Recommendations

This is a summary of current ratings and target prices for Michaels Companies and Build-A-Bear Workshop, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Michaels Companies 1 4 6 0 2.45
Build-A-Bear Workshop 0 1 1 0 2.50

Michaels Companies currently has a consensus target price of $24.11, suggesting a potential upside of 27.44%. Build-A-Bear Workshop has a consensus target price of $12.75, suggesting a potential upside of 32.81%. Given Build-A-Bear Workshop’s stronger consensus rating and higher possible upside, analysts plainly believe Build-A-Bear Workshop is more favorable than Michaels Companies.

Summary

Michaels Companies beats Build-A-Bear Workshop on 8 of the 14 factors compared between the two stocks.

Michaels Companies Company Profile

The Michaels Companies, Inc. (Michaels) is an arts and crafts specialty retailer in North America. The Company’s segments include Michaels-U.S., Michaels-Canada, Aaron Brothers, Pat Catan’s and Darice. As of January 28, 2017, the Company operated 1,223 Michaels retail stores in 49 states and Canada, with approximately 18,000 average square feet of selling space per store. It operated 109 Aaron Brothers stores in nine states, with approximately 5,500 average square feet of selling space and 35 Pat Catan’s stores in five states, with approximately 32,000 average square feet of selling space, as of January 28, 2017. The Company also operates an international wholesale business under the Darice brand name. The Company’s stores purchase custom frames, framing supplies and mats from its framing operation and subsidiary, Artistree, Inc. (Artistree), which consists of a manufacturing facility and four regional processing centers.

Build-A-Bear Workshop Company Profile

Build-A-Bear Workshop, Inc. operates as a specialty retailer of plush animals and related products. The company operates through three segments: Direct-to-Consumer, International Franchising, and Commercial. Its merchandise comprises a range of styles of stuffed animals; clothing, shoes, and accessories for the stuffed animals; and other toy and novelty items. The company operates its stores under the Build-A-Bear Workshop brand name; and sells its products through its e-commerce sites. As of December 30, 2017, it operated 361 owned stores, including 301 stores in North America; 59 stores in Europe; and 1 store in China, as well as 102 franchised stores internationally. The company has strategic relationships with Disney, DreamWorks Animation, and Hasbro. Build-A-Bear Workshop, Inc. was founded in 1997 and is headquartered in St. Louis, Missouri.

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