Critical Review: Duluth (NASDAQ:DLTH) and Build-A-Bear Workshop (NYSE:BBW)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Duluth	1.07%	-3.03%	-1.21%
Build-A-Bear Workshop	9.96%	29.66%	13.60%

Risk & Volatility

Duluth has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500. Comparatively, Build-A-Bear Workshop has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Duluth and Build-A-Bear Workshop, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Duluth	0	3	0	1	2.50
Build-A-Bear Workshop	1	1	2	0	2.25

Duluth currently has a consensus target price of $5.00, indicating a potential upside of 27.23%. Build-A-Bear Workshop has a consensus target price of $53.50, indicating a potential upside of 109.64%. Given Build-A-Bear Workshop’s higher probable upside, analysts plainly believe Build-A-Bear Workshop is more favorable than Duluth.

Institutional and Insider Ownership

24.4% of Duluth shares are owned by institutional investors. Comparatively, 79.3% of Build-A-Bear Workshop shares are owned by institutional investors. 40.4% of Duluth shares are owned by insiders. Comparatively, 4.0% of Build-A-Bear Workshop shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Duluth and Build-A-Bear Workshop”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Duluth	$550.75 million	0.27	-$16.39 million	$0.14	28.07
Build-A-Bear Workshop	$529.83 million	0.59	$52.20 million	$4.03	6.33

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

Summary

Build-A-Bear Workshop beats Duluth on 9 of the 15 factors compared between the two stocks.

About Duluth

Duluth Holdings Inc. sells casual wear, workwear, and accessories for men and women under the Duluth Trading brand in the United States. It provides shirts, pants, underwear, tanks, outerwear, footwear, accessories, and hard goods. The company offers its products under various trademarks, trade names, and service marks, including Alaskan Hardgear, Armachillo, Ballroom, Bucket Master, Cab Commander, Crouch Gusset, Dry on the Fly, Duluth Trading Co, Duluthflex, Fire Hose, Longtail T, No-Yank, No Polo Shirt, Wild Boar Mocs, and Buck Naked. Duluth Holdings Inc. markets its products through its Website, catalogs, and retail stores. As of May 17, 2018, it operated 36 retail stores. The company was formerly known as GEMPLER'S, Inc. Duluth Holdings Inc. was founded in 1989 and is headquartered in Belleville, Wisconsin.

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.