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Crown Crafts (CRWS)
NASDAQ:CRWS
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Crown Crafts
(NASDAQ:CRWS)
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Rating:52Neutral
Price Target:
$3.00
▲(5.63% Upside)
Action:ReiteratedDate:02/18/26
The score is held back primarily by weakened profitability, declining sales, and tariff/sourcing pressures highlighted on the earnings call, partially offset by strong cash generation and a very high dividend yield. Technical indicators are broadly neutral and do not materially improve the outlook.
Positive Factors
Operating cash flow & free cash flow strength
Consistent positive operating cash flow and strong free cash flow provide durable internal funding for working capital, dividends, and debt reduction. This cash generation cushions the business against earnings volatility, supports liquidity and strategic actions while management pursues efficiency and sourcing changes.
Brand & product pipeline expansion (Groovy Girls relaunch)
Reintroducing an iconic branded product that targets specialty and DTC channels can drive sustainable revenue diversification and higher-margin sales. Successful relaunches strengthen brand equity, reduce reliance on mass-retailer reorder cycles, and create durable wholesale and direct-retail opportunities over several quarters.
Liquidity position & covenant compliance
A moderate debt load paired with meaningful revolver availability and covenant compliance provides near-term financial flexibility. This balance-sheet posture enables management to fund inventory, pursue selective M&A or sourcing shifts, and maintain the quarterly dividend while prioritizing deleveraging and operational consolidation.
Negative Factors
Declining sales and weak category demand
Sustained revenue declines driven by soft bedding demand indicate structural softness in a core category and risk to top-line recovery. Prolonged weakness reduces leverage on fixed costs, pressures margins and inventory turns, and makes revenue growth harder to regain absent clear category or channel rebounds.
Tariff exposure & China sourcing concentration
Very high reliance on China production combined with elevated and category-volatile tariffs creates a persistent margin and supply-risk headwind. Shifting sourcing is costly and slow; tariff passthrough is limited by price-sensitive consumers, so margins and gross profit are structurally vulnerable until sourcing diversifies.
Compressed margins and accounting losses
Material margin compression and a return to net losses weaken durable profitability and equity returns. Reliance on a one-time insurance benefit to bolster results underscores earnings fragility; continued margin pressure would erode equity, constrain dividend sustainability, and limit ability to invest in growth.
Crown Crafts (CRWS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$31.24M
Dividend Yield12.12%
Average Volume (3M)35.20K
Price to Earnings (P/E)―
Beta (1Y)0.39
Revenue Growth-1.49%
EPS Growth-399.62%
CountryUS
Employees162
SectorConsumer Cyclical
Sector Strength84
IndustryFurnishings, Fixtures & Appliances
Share Statistics
EPS (TTM)0.14
Shares Outstanding10,697,787
10 Day Avg. Volume21,543
30 Day Avg. Volume35,197
Financial Highlights & Ratios
PEG Ratio0.01
Price to Book (P/B)0.96
Price to Sales (P/S)0.43
P/FCF Ratio3.88
Enterprise Value/Market Cap1.97
Enterprise Value/Revenue0.74
Enterprise Value/Gross Profit3.20
Enterprise Value/Ebitda17.23
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Crown Crafts Business Overview & Revenue Model
Company DescriptionCrown Crafts, Inc., through its subsidiaries, operates in the consumer products industry in the United States and internationally. It provides infant, toddler, and juvenile products, including infant and toddler beddings; blankets and swaddle blankets; nursery and toddler accessories; room décors; reusable and disposable bibs; burp cloths; hooded bath towels and washcloths; reusable and disposable placemats, and floor mats; disposable toilet seat covers and changing mats; developmental toys; feeding and care goods; and other infant, toddler, and juvenile soft goods. The company sells its products primarily to mass merchants, large chain stores, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, internet accounts, wholesale clubs and internet-based retailers through a network of sales force and independent commissioned sales representatives. Crown Crafts, Inc. was incorporated in 1957 and is headquartered in Gonzales, Louisiana.
How the Company Makes MoneyCrown Crafts generates revenue through multiple channels, primarily by selling its products to retailers and wholesalers. The company's core revenue streams include direct product sales of infant bedding, bath items, and other nursery accessories. Additionally, Crown Crafts often engages in partnerships with major retailers, which can enhance its distribution capabilities and market reach. The company also benefits from brand loyalty and recognition in the parenting segment, which drives repeat purchases. Seasonal product lines and collaborations with popular brands or franchises can also contribute to increased sales, particularly during key retail seasons.
Crown Crafts Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Jun 11, 2026
Earnings Call Sentiment Negative
The quarter shows a mixed picture: profitability and EPS improved, driven in meaningful part by a one-time $2.5 million insurance recovery and continued cost actions, and the company highlights product pipeline progress (Groovy Girls) and a solid liquidity position. However, underlying operational performance is challenged — revenue declined ~11.5%, gross margins compressed by 2.6 percentage points due to tariffs and one-time costs, core demand (notably bedding) remains soft, and the business carries significant China sourcing and tariff risk. Given the reliance on one-time gains to support earnings and the persistent demand and margin pressures, the negatives outweigh the positives for the quarter.Q3-2026 Updates
Positive Updates
Net Income and EPS Improvement
Net income increased to $1,500,000 from $900,000 a year ago (a +66.7% increase). Basic and diluted EPS rose to $0.14 from $0.09 (approx. +55.6%).
Insurance Proceeds Boosted Results
Received $2,500,000 in insurance proceeds related to a reps-and-warranties claim from a recent acquisition; net impact to income before tax (excluding certain legal/licensing expenses) was $2,100,000 — a one-time, positive contributor to the quarter's profitability.
Operational and Cost Management Actions
Company is executing cost initiatives and operational consolidations intended to reduce payroll and administrative expenses over time; incurred $600,000 of severance expenses in the quarter tied to these consolidation efforts.
Product Pipeline and Brand Development
Announced relaunch of Manhattan Toy's Groovy Girls (iconic soft fashion dolls) to be available starting May 2026, targeting specialty retailers and DTC channels — a strategic growth/brand initiative.
Balance Sheet and Liquidity Position
Ended quarter with total assets of $76.1 million, $10.6 million available under the revolving credit facility, total debt of $16.4 million, and compliance with all financial covenants.
Operating Cash Flow Resilience
Net cash provided by operating activities for the nine-month period was $7.1 million versus $7.0 million in the prior year period (approximately +1.4%), indicating continued cash generation.
Conservative Inventory and Sourcing Strategy
Inventory strategy described as deliberately conservative to minimize excess exposure in a volatile tariff/pricing environment; management is actively exploring alternative sourcing outside China while prioritizing quality and safety.
International Distribution and Licensing Advances
Ongoing expansion of international distributor base (more than 30 distributors and presence in 50+ countries noted) and new Disney license in Canada (launched January), signaling channel and geographic expansion opportunities.
Negative Updates
Revenue Decline
Net sales for the third quarter were $20.7 million versus $23.4 million in the prior-year quarter — a decline of $2.7 million or approximately -11.5% year-over-year, driven largely by softness in the bedding category.
Gross Margin Compression
Gross profit fell to $4.9 million from $6.1 million and gross margin declined to 23.5% from 26.1% (a drop of 2.6 percentage points), driven primarily by higher tariffs on China-imported products and certain one-time licensing/insurance-related expenses.
Soft Demand and Category Weakness (Bedding)
Management cited soft consumer demand and category-specific weakness in toddler bedding, with consumers trading down (example: bedding sets ~$50 vs blankets ~$12), materially impacting sales in that category.
Tariff-Driven Cost Pressure and Supply Risk
Elevated U.S. tariff rates have materially increased product costs and created supplier uncertainty. Management noted most production is sourced from China (high-90% concentration); some categories face total duties above 60% (e.g., diaper bags) while a current 20% rate applies broadly to categories like toys.
One-Time Acquisition-Related Costs and Inventory Write-downs
Acquisition-related issues included a product category dropped at retail, licensing shortfalls, and inventory closed out at deep discounts; while insurance proceeds offset some impact, these were one-time items evidencing integration risk and costs.
Higher Operating Expense Ratio
Marketing and administrative expenses increased by $600,000 to $5.0 million; as a percent of net sales these expenses rose to 24.0% from 18.8% in the prior-year quarter (an increase of 5.2 percentage points), driven in part by severance and consolidation costs.
Inventory Build and Seasonality Risks
Inventories were $31.2 million at quarter end versus $27.8 million at fiscal 2025 year-end (an increase of $3.4 million, or +12.2%), reflecting seasonal builds ahead of Chinese New Year and exposing the company to potential markdown risk in a volatile pricing environment.
Limited Near-Term Pricing Power
Management indicated further price increases are unlikely in the near term because consumers are price-sensitive and existing price increases (completed by October) have already impacted sales, limiting ability to pass through additional tariff-driven costs.
Company Guidance
Management's guidance focused on defending profitability and liquidity through pricing, cost and sourcing actions: they will continue to push pricing and cost initiatives to counter a soft sales environment (Q3 net sales $20.7M vs $23.4M a year ago) and tariff-driven margin pressure (Q3 gross profit $4.9M, gross margin 23.5% vs 26.1%), while prioritizing cash generation and debt reduction (nine‑month operating cash flow $7.1M vs $7.0M; total debt $16.4M; $10.6M revolver availability) and maintaining their regular quarterly dividend; near-term actions include conservative inventory policy (inventories $31.2M vs $27.8M FY25 year‑end), operational consolidation (incurred $600K severance this quarter with additional savings expected into the next fiscal year), evaluation of alternative sourcing (currently high‑90% China content; current tariff ~20% with some categories like diaper bags >60%), and selective M&A/insurance remedies (received $2.5M insurance proceeds, ~$2.1M net benefit to pre‑tax income); reported income before tax $2.1M (vs $1.3M), net income $1.5M (vs $0.9M) and EPS $0.14 (vs $0.09); management reiterated no near‑term additional price increases, the Groovy Girls relaunch in May 2026, and will provide a further update on progress on the mid‑June call.Crown Crafts Financial Statement Overview
Summary
Financials are mixed: profitability and margins have deteriorated and revenue is down (loss-making TTM with ~-11% net margin and ~23% gross margin), while leverage is moderate but rising. Offsetting this, operating cash flow and free cash flow remain solid (TTM OCF $9.9M; FCF $9.1M), supporting near-term liquidity.Income Statement
Profitability has deteriorated meaningfully versus prior years. TTM (Trailing-Twelve-Months) revenue is down (-3.1%) and the company is loss-making (net margin about -11%), a sharp reversal from the solid profits posted in FY2022–FY2024. Gross margin has also compressed to ~23% in TTM (vs ~26–30% historically), signaling weaker pricing/mix or higher costs. The key strength is that the business has demonstrated the ability to be profitable in recent history, but the current earnings trajectory is clearly negative.34
Negative
Balance Sheet
Leverage is moderate but rising: debt is about 0.68x equity in TTM (up from ~0.46x in FY2024 and very low in FY2022), while returns on equity are negative in TTM due to net losses. Equity remains sizeable ($39.2M) relative to the asset base ($76.1M), which provides some balance-sheet support. The main risk is that continued losses could pressure equity and make the current debt load feel heavier over time.49
Neutral
Cash Flow
Cash generation is the bright spot. TTM operating cash flow is positive ($9.9M) and free cash flow is strong ($9.1M) with a notable improvement in free cash flow growth (+39%). Even with accounting losses, cash flow has remained positive, which helps liquidity and financial flexibility. The weakness is that cash conversion relative to earnings quality is strained by losses, and sustaining strong cash flow while revenue declines may be challenging if working-capital benefits reverse.66
Positive
| Breakdown | TTM | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 83.12M | 87.25M | 87.63M | 75.05M | 87.36M | 79.16M |
| Gross Profit | 19.20M | 20.49M | 23.00M | 19.83M | 23.31M | 24.10M |
| EBITDA | 3.57M | -4.76M | 8.68M | 8.63M | 11.81M | 13.30M |
| Net Income | -9.22M | -9.36M | 4.89M | 5.65M | 9.92M | 6.08M |
Balance Sheet | ||||||
| Total Assets | 76.10M | 81.15M | 82.71M | 90.97M | 60.16M | 58.08M |
| Cash, Cash Equivalents and Short-Term Investments | 2.40M | 521.00K | 829.00K | 1.74M | 1.60M | 613.00K |
| Total Debt | 32.62M | 31.60M | 23.84M | 29.99M | 2.64M | 6.41M |
| Total Liabilities | 36.91M | 41.53M | 31.11M | 41.76M | 14.35M | 16.22M |
| Stockholders Equity | 39.20M | 39.62M | 51.60M | 49.21M | 45.80M | 41.87M |
Cash Flow | ||||||
| Free Cash Flow | 9.10M | 9.75M | 6.30M | 6.92M | 7.73M | 8.01M |
| Operating Cash Flow | 9.93M | 9.82M | 7.08M | 7.74M | 8.26M | 8.74M |
| Investing Cash Flow | -770.00K | -17.17M | -193.00K | -16.91M | -490.00K | -733.00K |
| Financing Cash Flow | -7.81M | 7.04M | -7.80M | 9.32M | -6.79M | -7.67M |
Crown Crafts Technical Analysis
Positive
2.84
Price Trends
2.86
Positive
2.80
Positive
2.81
Positive
Market Momentum
0.02
Positive
51.72
Neutral
39.13
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CRWS, the sentiment is Positive. The current price of 2.84 is below the 20-day moving average (MA) of 2.98, below the 50-day MA of 2.86, and above the 200-day MA of 2.81, indicating a neutral trend. The MACD of 0.02 indicates Positive momentum. The RSI at 51.72 is Neutral, neither overbought nor oversold. The STOCH value of 39.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CRWS.
Crown Crafts Risk Analysis
Crown Crafts disclosed 21 risk factors in its most recent earnings report. Crown Crafts reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Crown Crafts Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
54 Neutral | $154.55M | -5.08 | -11.27% | 7.20% | -12.09% | -204.66% | |
53 Neutral | $74.99M | -1.99 | -17.84% | 4.51% | -1.76% | -67.05% | |
52 Neutral | $31.24M | -3.28 | -22.07% | 12.12% | -1.49% | -399.62% | |
50 Neutral | $33.26M | -1.60 | -39.99% | ― | -4.94% | 11.35% | |
48 Neutral | $75.34M | -1.32 | -9999.00% | ― | -9.47% | 48.11% |
* Consumer Cyclical Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.