Reviewing some numbers and making some adjustments I get the following
EPV=$6.44 which is much less than the asset value. This means management does a horrible job of running the business and/or the company operates without any advantages, which is obvious.
Graham=$10.20
DCF=$8.44
Current price = $4.55
So in this scenario there are a few things to consider.
First, I don't like toy companies, especially as a turnaround. It's tough enough as it is when it's a leader but a turnaround will be just as difficult.
The reason is that parents buy their kids only 1 of the same toy. I don't believe many parents or kids would want more than 1 bear, no matter how much they customized it.
This leads me to think whether it is a fad. Is it like Heely's or Crocs? Interesting concept as it kept catching on but get tiring and eventually non existent.
So you have to consider whether it is a value trap. These specialty companies are the hardest to determine. Unless BBW was trading at less than liquidation value, I wouldn't be interested.
Fundamentals isn't on the great side but that's expected for a play like this.
Price will meet value but there are two ways that could happen.
1. Stock price goes up to its intrinsic value
2. Intrinsic value comes down to its current stock price.
It's something that you have to decide after reading and studying the company, rather than take my 5min guess at it.
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