Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x from 18.1x at the end of 2024.</li><li>Prospective earnings for the index are down 2.3% so far this year, but we note that it has outperformed the broader S&amp;P 600 Small Cap Index, which is down 6.3%.</li><li>Meanwhile, the S&amp;P SmallCap 600 Index is down 13.1% YTD, better than the WTR Consumer Products Index, despite relative earnings underperformance versus our index, as its prospective absolute P/E ratio compressed a lesser 1.2x to 15.3x from 16.5x at the end of 2024. </li></ul>

The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x from 18.1x at the end of 2024.Prospective earnings for the index are down 2.3% so far this year, but we note that it has outperformed the broader S&amp;P 600 Small Cap Index, which is down 6.3%.Meanwhile, the S&amp;P SmallCap 600 Index is down 13.1% YTD, better than the WTR Consumer Products Index, despite relative earnings underperformance versus our index, as its prospective absolute P/E ratio compressed a lesser 1.2x to 15.3x from 16.5x at the end of 2024. 

WTR Consumer Products Index Lags S&P 600 YTD Despite Relative Earnings Outperformance

Equity Research Focusing on the Consumer Sector, Small Cap Consumer Research

Small Cap Consumer Research

Equity Research Focusing on the Consumer Sector

Small Cap Consumer Research, LLC is a leading company-sponsored equity research provider focusing on the consumer sector (apparel, brand licensing and specialty retailing segments).

Equity Bottom-Up

<ul><li>We are reiterating our Buy rating, projections and $58 price target for Build-A-Bear Workshop after visiting stores in Connecticut and Long Island.</li><li>We believe, with compelling offerings, the ability to launch new exciting seasonal items and then further leverage the offerings via extensions into Mini (Beans) or Giant sized "furry friends," the ability to drive upside from movie releases, to quickly capitalize on online trends and to expand key licensed franchises (Sanrio, Pokemon), Build-A-Bear is putting on a master class in how to drive incremental purchases and to achieve top and bottom line growth.</li><li>As such, we remain highly impressed and believe there remains upside to our top and bottom line projections and price target and reiterate our Buy rating and $58 price target.</li></ul>

We are reiterating our Buy rating, projections and $58 price target for Build-A-Bear Workshop after visiting stores in Connecticut and Long Island.We believe, with compelling offerings, the ability to launch new exciting seasonal items and then further leverage the offerings via extensions into Mini (Beans) or Giant sized "furry friends," the ability to drive upside from movie releases, to quickly capitalize on online trends and to expand key licensed franchises (Sanrio, Pokemon), Build-A-Bear is putting on a master class in how to drive incremental purchases and to achieve top and bottom line growth.As such, we remain highly impressed and believe there remains upside to our top and bottom line projections and price target and reiterate our Buy rating and $58 price target.

BBW: Snapping the Store: Winning from Mini to Giant Sizes; Reiterate Buy, PT

<ul><li>We are reiterating our Buy rating and $40 price target, but lowering our 2025 and 2026 projections after meeting with JAKKS management and contemplating the near and longer term impact of China tariffs on the company.</li><li>In the very near term, while only a short period (approximately 30 day) the impact of 100%+ tariffs on China goods created a virtual stop in sales at JAKKS, and with a business model focused on freight on board ("FOB") shipping, necessitated a ramp period thereafter.</li><li>Further, the current 30% tariff will mean that, yes, there will be a Halloween and Xmas, but it could be more cautious in terms of retailers placing product bets and, will obviously hurt returns for manufacturers and the entire toy supply chain.</li></ul>

We are reiterating our Buy rating and $40 price target, but lowering our 2025 and 2026 projections after meeting with JAKKS management and contemplating the near and longer term impact of China tariffs on the company.In the very near term, while only a short period (approximately 30 day) the impact of 100%+ tariffs on China goods created a virtual stop in sales at JAKKS, and with a business model focused on freight on board ("FOB") shipping, necessitated a ramp period thereafter.Further, the current 30% tariff will mean that, yes, there will be a Halloween and Xmas, but it could be more cautious in terms of retailers placing product bets and, will obviously hurt returns for manufacturers and the entire toy supply chain.

JAKK: Further Tariff Proofing the Model Post Mgmt. Meetings; Reiterate Buy

<ul><li>We are reiterating our Buy rating and $58 price target for Build-A-Bear Workshop and slightly lowering our EPS projections to account for the current tariff-driven environment, as the company announced material 1Q top and bottom line upside, driven by strong offerings, seasonal shifts and further gains in the higher margin franchising and third party segments.</li><li>Further, management continues to return capital to shareholders via share repurchases and quarterly dividends, while still maintaining a cash rich ($3.37 per share), debt free balance sheet.</li><li>That said, given the current uncertain economic environment, management, despite the 1Q upside, remained conservative in their guidance, reiterating FY25 revenue growth of mid single digits and reducing the pre-tax projection to $61 to $67 million.</li></ul>

We are reiterating our Buy rating and $58 price target for Build-A-Bear Workshop and slightly lowering our EPS projections to account for the current tariff-driven environment, as the company announced material 1Q top and bottom line upside, driven by strong offerings, seasonal shifts and further gains in the higher margin franchising and third party segments.Further, management continues to return capital to shareholders via share repurchases and quarterly dividends, while still maintaining a cash rich ($3.37 per share), debt free balance sheet.That said, given the current uncertain economic environment, management, despite the 1Q upside, remained conservative in their guidance, reiterating FY25 revenue growth of mid single digits and reducing the pre-tax projection to $61 to $67 million.

BBW: 1Q Review: Impressive Q; Guide Right for the Times; Reiterate Buy, $58 PT

<ul><li>We are reiterating our Buy rating, $58 price target and projections for Build-A-Bear Workshop with the company announcing 1QFY25 (April) results before the open on Thursday.</li><li>We believe, driven by strong Easter and Spring offerings, further expansion of the Mini Beans, and continued growth in the franchising and commercial space, revenue for 1Q will be solid.</li><li>That said, the near term question remains the impact of tariffs on overall margins, as Build-A-Bear purchased 58% of merchandise from China and 38% from Vietnam in FY24, with China projected by management to account for less than half of merchandise in FY25.</li></ul>

We are reiterating our Buy rating, $58 price target and projections for Build-A-Bear Workshop with the company announcing 1QFY25 (April) results before the open on Thursday.We believe, driven by strong Easter and Spring offerings, further expansion of the Mini Beans, and continued growth in the franchising and commercial space, revenue for 1Q will be solid.That said, the near term question remains the impact of tariffs on overall margins, as Build-A-Bear purchased 58% of merchandise from China and 38% from Vietnam in FY24, with China projected by management to account for less than half of merchandise in FY25.

BBW: 1Q Preview: Top Line Strong; Tariff Impact Unknown; Reiterate Buy, $58 PT

United States

Hasbro, Inc. designs, manufactures, and markets toys, games, interactive software, puzzles, and infant products in the United States and internationally. The Company's products include a variety of games, including traditional board, card, hand-held electronic, trading card, role-playing and DVD games, as well as electronic learning aids and puzzles as well as dolls and action figures.

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Hasbro Inc (HAS US)

WTR Consumer Products Index Lags S&P 600 YTD Despite Relative Earnings Outperformance

The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x...

Water Tower Research

BBW: Snapping the Store: Winning from Mini to Giant Sizes; Reiterate Buy, PT

We are reiterating our Buy rating, projections and $58 price target for Build-A-Bear Workshop after visiting stores in Connecticut and Long...

Small Cap Consumer Research

JAKK: Further Tariff Proofing the Model Post Mgmt. Meetings; Reiterate Buy

We are reiterating our Buy rating and $40 price target, but lowering our 2025 and 2026 projections after meeting with JAKKS management and...

Small Cap Consumer Research

BBW: 1Q Review: Impressive Q; Guide Right for the Times; Reiterate Buy, $58 PT

We are reiterating our Buy rating and $58 price target for Build-A-Bear Workshop and slightly lowering our EPS projections to account for the...

Small Cap Consumer Research

BBW: 1Q Preview: Top Line Strong; Tariff Impact Unknown; Reiterate Buy, $58 PT

We are reiterating our Buy rating, $58 price target and projections for Build-A-Bear Workshop with the company announcing 1QFY25 (April) results...

Small Cap Consumer Research

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