Build-A-Bear (BBW) Fourth Quarter Earnings and Revenue Best Estimates

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Build-A-Bear (BBW) exited with quarterly earnings of $0.47 per share, beating Zacks consensus estimate of $0.16 per share. That compares to earnings of $0.40 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 193.75%. A quarter ago, this toy retailer was expected to post a loss of $0.04 per share when it was actually producing a profit of $0.11, delivering a 375% surprise.

In the past four quarters, the company has exceeded consensus EPS estimates twice.

Build-A-Bear, which is part of the Zacks Retail – Miscellaneous industry, reported revenue of $93.66 million for the quarter ended January 2021, beating Zacks’ consensus estimate of 3.49%. That compares to revenues of $104.58 million a year ago. The company has exceeded consensus revenue estimates three times in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Build-A-Bear shares are up about 67.2% year-to-date compared to the S&P 500’s 3.2% gain.

What’s next for Build-A-Bear?

With Build-A-Bear outperforming the market so far this year, the question on investors’ minds is: what’s next for the stock?

There is no easy answer to this key question, but a reliable measure that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this earnings release, the trend in estimate revisions for Build-A-Bear was unfavorable. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a Zacks No. 4 (sell) ranking for the stock. Thus, stocks are expected to underperform the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.05 on $65.43 million in revenue for the upcoming quarter and $0.23 on $310.35 million in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, Retail – Miscellaneous currently sits in the bottom 33% of Zacks 250+ industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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