Analyzing Build-A-Bear Workshop (NYSE:BBW) and DICK’S Sporting Goods (NYSE:DKS)

Build-A-Bear Workshop (NYSE:BBW) and DICK’S Sporting Goods (NYSE:DKS) are both retail/wholesale companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, profitability and risk.

Volatility & Risk

Build-A-Bear Workshop has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500. Comparatively, DICK’S Sporting Goods has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Build-A-Bear Workshop and DICK’S Sporting Goods, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Build-A-Bear Workshop	0	1	4	0	2.80
DICK’S Sporting Goods	2	10	12	0	2.42

Build-A-Bear Workshop currently has a consensus target price of $68.00, suggesting a potential upside of 10.87%. DICK’S Sporting Goods has a consensus target price of $232.05, suggesting a potential upside of 0.88%. Given Build-A-Bear Workshop’s stronger consensus rating and higher possible upside, equities analysts plainly believe Build-A-Bear Workshop is more favorable than DICK’S Sporting Goods.

Dividends

Build-A-Bear Workshop pays an annual dividend of $0.88 per share and has a dividend yield of 1.4%. DICK’S Sporting Goods pays an annual dividend of $4.85 per share and has a dividend yield of 2.1%. Build-A-Bear Workshop pays out 19.7% of its earnings in the form of a dividend. DICK’S Sporting Goods pays out 33.9% 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 raised its dividend for 1 consecutive years and DICK’S Sporting Goods has raised its dividend for 11 consecutive years. DICK’S Sporting Goods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

79.3% of Build-A-Bear Workshop shares are owned by institutional investors. Comparatively, 89.8% of DICK’S Sporting Goods shares are owned by institutional investors. 5.8% of Build-A-Bear Workshop shares are owned by company insiders. Comparatively, 32.6% of DICK’S Sporting Goods shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Build-A-Bear Workshop and DICK’S Sporting Goods”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Build-A-Bear Workshop	$496.40 million	1.62	$51.78 million	$4.46	13.75
DICK’S Sporting Goods	$13.44 billion	1.37	$1.17 billion	$14.32	16.06

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

Profitability

This table compares Build-A-Bear Workshop and DICK’S Sporting Goods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Build-A-Bear Workshop	11.34%	41.14%	19.56%
DICK’S Sporting Goods	8.52%	36.54%	11.01%

Summary

DICK’S Sporting Goods beats Build-A-Bear Workshop 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 DICK’S Sporting Goods

DICK’s Sporting Goods, Inc. engages in the retailing of an extensive assortment of authentic sports equipment, apparel, footwear, and accessories. It also offers its products both online and through mobile applications. The company was founded by Richard T. Stack in 1948 and is headquartered in Coraopolis, PA.