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The Build-A-Bear Workshop (NYSE:BBW) Share Price Is Down 56% So Some Shareholders Are Wishing They Sold

Simply Wall St

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Build-A-Bear Workshop, Inc. (NYSE:BBW) shareholders should be happy to see the share price up 21% in the last month. Meanwhile over the last three years the stock has dropped hard. Indeed, the share price is down a tragic 56% in the last three years. So it is really good to see an improvement. Perhaps the company has turned over a new leaf.

View our latest analysis for Build-A-Bear Workshop

Build-A-Bear Workshop isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over the last three years, Build-A-Bear Workshop's revenue dropped 3.1% per year. That's not what investors generally want to see. With revenue in decline, and profit but a dream, we can understand why the share price has been declining at 24% per year. Having said that, if growth is coming in the future, now may be the low ebb for the company. We'd be pretty wary of this one until it makes a profit, because we don't specialize in finding turnaround situations.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

NYSE:BBW Income Statement, June 17th 2019

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. This free report showing analyst forecasts should help you form a view on Build-A-Bear Workshop

A Different Perspective

Build-A-Bear Workshop shareholders are down 22% for the year, but the market itself is up 2.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 15% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.

Build-A-Bear Workshop is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.