Analyzing Itochu (OTCMKTS:ITOCY) and Build-A-Bear Workshop (NYSE:BBW)

Itochu (OTCMKTS:ITOCY) and Build-A-Bear Workshop (NYSE:BBW) are both retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, earnings, risk, profitability, institutional ownership, dividends and valuation.

Volatility and Risk

Itochu has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500. Comparatively, Build-A-Bear Workshop has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500.

Insider and Institutional Ownership

0.1% of Itochu shares are held by institutional investors. Comparatively, 79.3% of Build-A-Bear Workshop shares are held by institutional investors. 5.8% of Build-A-Bear Workshop shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Itochu and Build-A-Bear Workshop, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Itochu	0	0	0	0	0.00
Build-A-Bear Workshop	0	0	3	1	3.25

Build-A-Bear Workshop has a consensus target price of $68.00, indicating a potential upside of 5.36%. Given Build-A-Bear Workshop’s stronger consensus rating and higher possible upside, analysts plainly believe Build-A-Bear Workshop is more favorable than Itochu.

Earnings and Valuation

This table compares Itochu and Build-A-Bear Workshop”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Itochu	$96.69 billion	0.87	$5.89 billion	$7.66	15.21
Build-A-Bear Workshop	$496.40 million	1.72	$51.78 million	$4.46	14.47

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

Dividends

Itochu pays an annual dividend of $2.01 per share and has a dividend yield of 1.7%. Build-A-Bear Workshop pays an annual dividend of $0.88 per share and has a dividend yield of 1.4%. Itochu pays out 26.2% of its earnings in the form of a dividend. Build-A-Bear Workshop pays out 19.7% 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Itochu	5.93%	13.99%	5.80%
Build-A-Bear Workshop	11.34%	42.37%	19.95%

Summary

Build-A-Bear Workshop beats Itochu on 12 of the 18 factors compared between the two stocks.

About Itochu

ITOCHU Corporation engages in trading and importing/exporting various products worldwide. The company’s Textile segment produces and sells raw materials, threads, and textiles; and garments, home furnishings, and industrial materials, as well as trades in industrial textile and lifestyle products. Its Machinery segment engages in the plants, bridges, railways, and other infrastructure; power generation, transmission, transformation, and sale; water, environment and waste-related; ship trading; renewable and alternative energy; and waste recycling businesses. The company’s Metals & Minerals segment engages in development of metal and mineral resource; processing and steel products; trading of iron ore, coal, pig iron and ferrous raw materials, non-ferrous and light metals, steel products, nuclear fuels, and greenhouse gas emissions; and recycling and waste treatment activities. Its Energy & Chemicals segment trades in crude oil, petroleum products, LPG, LNG, natural gas, hydrogen, organic and inorganic chemicals, functional food, synthetic resins, packaging materials, household goods, fine chemicals, pharmaceuticals, and electronic materials, as well as engages in the solar and biomass power generation, electricity trading, and the energy storage cell businesses. The company’s Food segment produces, distributes, and retails food products. Its General Products & Realty segment produces and sells paper, pulp, natural rubber, tire, and wood products and materials; develops and operates real estate properties, such as housing, logistics facilities, and other projects; and offers logistics services. The company’s ICT & Financial Business segment offers IT, Internet related and venture capital, mobile telephone equipment, BPO, broadcasting and communications, entertainment and content, healthcare and preventive medicine outsourcing, and financial and insurance brokerage services. The company was founded in 1858 and is headquartered in Tokyo, Japan.

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.