Analyzing Sally Beauty (NYSE:SBH) & Build-A-Bear Workshop (NYSE:BBW)

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

Analyst Recommendations

This is a summary of current ratings for Build-A-Bear Workshop and Sally Beauty, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Build-A-Bear Workshop	0	1	4	0	2.80
Sally Beauty	1	5	3	0	2.22

Build-A-Bear Workshop presently has a consensus target price of $68.00, suggesting a potential upside of 25.17%. Sally Beauty has a consensus target price of $14.00, suggesting a potential downside of 7.75%. Given Build-A-Bear Workshop’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Build-A-Bear Workshop is more favorable than Sally Beauty.

Insider and Institutional Ownership

79.3% of Build-A-Bear Workshop shares are held by institutional investors. 5.8% of Build-A-Bear Workshop shares are held by company insiders. Comparatively, 1.6% of Sally Beauty shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Build-A-Bear Workshop	$522.52 million	1.36	$51.78 million	$4.46	12.18
Sally Beauty	$3.69 billion	0.41	$153.41 million	$1.86	8.16

Sally Beauty has higher revenue and earnings than Build-A-Bear Workshop. Sally Beauty 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.

Risk and Volatility

Build-A-Bear Workshop has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500. Comparatively, Sally Beauty has a beta of 1.34, meaning that its share price is 34% more volatile than the S&P 500.

Profitability

This table compares Build-A-Bear Workshop and Sally Beauty’s 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%
Sally Beauty	5.26%	28.11%	7.05%

Summary

Build-A-Bear Workshop beats Sally Beauty on 11 of the 14 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 Sally Beauty

Sally Beauty Holdings, Inc. operates as a specialty retailer and distributor of professional beauty supplies. The company operates through two segments, Sally Beauty Supply and Beauty Systems Group. The Sally Beauty Supply segment offers beauty products, including hair color and care products, skin and nail care products, styling tools, and other beauty products for retail customers, salons, and salon professionals. This segment also provides products under Wella and L'Oreal brands. The Beauty Systems Group segment offers professional beauty products, such as hair color and care products, skin and nail care products, styling tools, and other beauty items directly to salons and salon professionals through its professional-only stores, e-commerce platforms, and sales force, as well as through franchised stores under the Armstrong McCall store name. This segment also sells products under Paul Mitchell and Wella brands. It operates stores and franchised units in the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain, and Germany. The company distributes its products through full-service/exclusive distributors and open-line distributors. Sally Beauty Holdings, Inc. was founded in 1964 and is headquartered in Denton, Texas.