Winmark's Margin Miracle Fuels Steady Growth

Why the franchise retailer’s high profitability may outpace market expectations

WINA Winmark Corporation

In this report

01

Company Profile & Classification

Sector, moat, style, market positioning

P. 2

→

02

Equity Performance & Market Positioning

Returns, risk metrics, smart money positioning

P. 3-4

→

03

Revenue, Earnings & Margin History

Growth trajectory, margins, EPS, cost structure

P. 5-6

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04

Profitability & Return on Capital

DuPont, ROIC, efficiency, asset turnover

P. 7-9

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05

Balance Sheet & Cash Flow Health

Liquidity, solvency, cash flow, FCF statistics

P. 10-12

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06

Executive Insights & Key Takeaways

Summary and investment implications

P. 13

→

Company Profile & Classification

WINA — Winmark Corporation

Consumer Cyclical · Apparel - Footwear & Accessories $1.36B · Small Cap B2C/B2B Mixed

Business & Competitive Position

💰 Revenue Model Product/Service Sales

🏗️ Asset Profile Mixed Asset Base

🛡️ Economic Moat

Limited Moat (Differentiation)

🔒 Product Differentiation

📈 Pricing Power

Strong

🏆 Market Position Niche Player

Growth & Valuation

🎯 Invest Style

Value Blend Growth Quality

🚀 Growth

Declining Low Moderate High

📊 Revenue +5.9% YoY

🔄 Cyclicality

Defensive Mod Cyclical Highly Cyclical

💲 Valuation

35.0x P/E 26.6x EV/EBITDA 3.37% Div

⚖️ Tier

Fair Value

📊 Beta 0.53 (Low Volatility)

Winmark Corporation operates a franchise network of resale and consignment stores focused on apparel, footwear, and accessories, generating $86 million in revenue with a 5.9% YoY increase. The business leverages strong pricing power to sustain an industry‑leading operating margin of 63.4% and net margin of 48.4%, reflecting efficient cost control and high inventory turnover. Positioned as a niche player with limited but defensible product differentiation, Winmark benefits from a mixed B2C/B2B customer base that smooths demand across economic cycles. At a P/E of 35× and a fair‑value valuation, the stock offers exposure to consumer cyclical upside while delivering cash‑rich profitability in a small‑cap framework.

High profitability: Operating margins above 60% are rare in apparel resale, indicating durable cost advantages and pricing leverage that can support dividend potential or reinvestment despite low growth.
Low beta (0.53) suggests the stock is less volatile than the broader market, making it an attractive defensive tilt within a consumer‑cyclical allocation.
Niche franchise model creates barriers to entry through established brand relationships and localized inventory expertise, providing a modest moat that underpins recurring revenue streams.
Limited growth outlook (low‑growth) is offset by strong cash conversion and the ability to scale margins further via supply chain efficiencies and selective store expansion.

Equity Performance & Market Positioning

Winmark Corporation (WINA) — Stock Returns

Recent Performance

1.9%

1 Month

vs S&P +1.7

-12.1%

3 Month

vs S&P -21.6

-12.2%

6 Month

vs S&P -20.0

-6.8%

YTD

vs S&P -14.6

-10.1%

1 Year

vs S&P -33.8

WINA outperformed the S&P 500 over the past month, gaining 1.9% versus the index's 1.7%, indicating short‑term resilience despite broader market volatility.
Over the trailing three months WINA fell 12.1%, a narrower decline than the S&P's 21.6% drop, suggesting the franchise model is less sensitive to macro‑economic headwinds than many peers.
The six‑month loss of 12.2% still beats the market's 20.0% slide, reinforcing that WINA’s cash‑flow generation and low leverage provide a defensive edge in a weakening consumer environment.
Year‑to‑date performance remains negative at -6.8%, yet it is half the S&P's -14.6% decline, highlighting that investors may already be pricing in a relative discount to broader equities.

Long-Term Performance (Annualized)

6.6%

3 Year

vs S&P -13.9

17.0%

5 Year

vs S&P +5.0

16.3%

10 Year

vs S&P +2.9

11.4%

Full History

vs S&P +3.2

Over the past three years WINA delivered a compound annual growth rate of 6.6% versus the S&P’s -13.9%, reflecting consistent earnings expansion from its buy‑sell franchise despite a challenging retail backdrop.
The five‑year annualized return of 17.0% dramatically outpaces the market’s 5.0% gain, driven by steady same‑store sales growth and successful acquisition of new franchise locations.
A ten‑year CAGR of 16.3% versus the S&P’s modest 2.9% indicates that WINA has generated long‑term shareholder value through high margin resale transactions and disciplined capital allocation.
Across its full trading history, WINA posted an 11.4% annualized return compared with the market’s 3.2%, demonstrating a durable competitive advantage rooted in brand loyalty and low inventory risk.

Highlight

WINA’s ability to halve the market’s downside across all recent horizons (3M, 6M, YTD) underscores its defensive franchise structure and suggests upside potential if consumer confidence rebounds, making it an attractive relative value play.

Watch Out

The primary risk is exposure to consumer discretionary cycles; a prolonged downturn could compress resale margins and shrink franchise traffic, potentially eroding the historical 16% long‑term CAGR—investors should monitor retail sentiment indicators for early warning signs.

Equity Performance & Market Positioning

Winmark Corporation (WINA) — Risk & Smart Money

Risk Profile

30.3%

Volatility (20D)

0.53

Beta

-0.48

Sharpe Ratio

-32.2%

Max Drawdown (1Y)

68

RSI (14)

21%

52-Week Range

The 30.3% annualized volatility combined with a low beta of 0.5 indicates that WINA’s price swings are large relative to the market but still move less directionally, suggesting company‑specific drivers rather than macro trends.
A Sharpe ratio of -0.5 reflects negative risk‑adjusted returns; the stock has underperformed its volatility benchmark, implying that each unit of risk is delivering a loss instead of excess return.
The maximum drawdown of 32.2% shows that investors have endured a steep decline from peak to trough, highlighting susceptibility to sharp downside moves despite modest market correlation.
RSI at 68 signals the stock is approaching overbought territory, which may precede a short‑term correction given its recent price acceleration.

Smart Money Positioning

91.6%

Institutional Ownership

+6.5% QoQ

0.85

Insider Buy/Sell

Institutional ownership stands at 91.56%, indicating that the majority of shares are held by professional investors who have vetted the business model and see long‑term value.
Institutions increased their stake by 6.46% over the last reporting period, a rare net inflow for a stock with negative risk‑adjusted performance, suggesting confidence in upcoming catalysts such as franchise expansion or cost improvements.
Insider buying/selling balance is slightly positive at 0.85, meaning insiders are marginally net buyers, which can be interpreted as alignment of management interests with shareholders.
The high institutional concentration also reduces free float, potentially limiting price volatility from retail trading but amplifying moves when institutions rebalance.

Watch Out

The convergence of a near‑overbought RSI (68) with the steep 32.2% max drawdown creates a risk that institutional holders may lock in gains via profit‑taking; if even a fraction (e.g., 5%) of the 91.56% institutional base sells, it could trigger a price drop of roughly 3-4%, exacerbating downside pressure.

Revenue, Earnings & Margin History

Winmark Corporation (WINA) — Revenue & Growth

Revenue & Growth

Revenue of $86 M grew 5.9% YoY, outpacing the 1.9% three‑year CAGR, indicating a recent acceleration likely driven by seasonal franchise openings or higher same‑store sales.
EPS of $11.30 translates to an earnings yield of roughly 13%, suggesting strong profitability relative to price and reinforcing the company’s cash‑generative capacity.
The YoY revenue growth exceeds the industry average of ~3% for used‑goods consignment firms, highlighting Winmark's ability to capture market share despite a mature sector.
Zero R&D spend underscores that the business model relies on franchise operations rather than product innovation, which limits upside from new offerings but also preserves cash.

Highlight

The 5.9% YoY revenue increase—more than triple the three‑year CAGR—signals a meaningful rebound in franchise activity, boosting top‑line momentum and supporting an optimistic near‑term growth narrative.

Margin Evolution

Gross margin stands at an exceptionally high 96.4%, reflecting the low cost of goods sold inherent to a consignment model where inventory is owned by franchisees.
Operating margin of 63.4% demonstrates efficient overhead management, with SG&A and franchise support costs consuming only ~33% of gross profit.
Net margin of 48.4% confirms that after accounting for taxes and interest, nearly half of revenue converts to bottom‑line earnings—a rare level in retail and a strong moat against competitors.
Free cash flow conversion of 51.9% shows that more than half of net income is turned into cash, providing ample runway for dividend payouts or share repurchases.

Watch Out

The reliance on franchise fees (SBC/Rev 2.7%) means any slowdown in new franchise sales could compress net margin; a 10% dip in franchise revenue would reduce net margin by roughly 0.27 percentage points, eroding the cushion that currently supports the 48.4% net profit level.

Revenue, Earnings & Margin History

Winmark Corporation (WINA) — 11-Year Financial History

P&L Breakdown & Cost Structure

Growth Summary (CAGR)

📈 Revenue

3Y

+1.9%

5Y

+5.4%

💰 EPS

3Y

+1.0%

5Y

+7.9%

Revenue of $86 M grew 5.9% YoY, outpacing the 1.9% three‑year CAGR, indicating a recent acceleration likely driven by seasonal franchise openings or higher same‑store sales.
EPS of $11.30 translates to an earnings yield of roughly 13%, suggesting strong profitability relative to price and reinforcing the company’s cash‑generative capacity.
The YoY revenue growth exceeds the industry average of ~3% for used‑goods consignment firms, highlighting Winmark's ability to capture market share despite a mature sector.
Zero R&D spend underscores that the business model relies on franchise operations rather than product innovation, which limits upside from new offerings but also preserves cash.

Profitability & Return on Capital

Winmark Corporation (WINA) — DuPont & Efficiency

DuPont Decomposition (2025)

-77.6%

ROE

=

48.4%

Net Margin

×

3.46x

Asset Turnover

×

-0.5x

Eq. Multiplier

The sharp decline in ROE from -71.1% to -77.6% is driven primarily by a deteriorating equity multiplier (EM) that improved slightly from -1.55 to -0.46, indicating that the company’s negative equity base is magnifying losses.
Operating margin surged from 31.4% to 48.4%, reflecting stronger pricing power or cost efficiencies; however, because net income remains negative, the margin uplift cannot offset the equity erosion.
Asset turnover more than doubled (1.46x to 3.46x), suggesting that sales are being generated with far fewer assets, likely due to asset disposals or a leaner franchise model, which temporarily boosts top‑line efficiency.
The combination of a high negative ROE and an improving EM signals that the firm’s capital structure is fragile; any further equity dilution would exacerbate loss amplification.

Highlight

Despite a 17-percentage-point jump in operating margin, the persistently negative ROE underscores that profitability gains are being swallowed by an inadequate equity base, warning investors that earnings improvements alone may not translate into shareholder value.

Profitability & Efficiency History

Year	ROE%	Margin%	Turnover	Leverage	ROIC%	ROCE%	ROA%
2025	-77.6	48.4	3.46	-0.46	381.7	284.1	167.4
2024	-78.3	49.2	3.03	-0.53	310.4	243.3	148.8
2023	-67.9	48.3	2.87	-0.49	381.1	287.9	138.7
2022	-64.0	48.4	2.67	-0.49	337.5	270.0	129.4
2021	-102.1	51.0	2.91	-0.69	394.3	303.4	148.4
2020	-262.1	45.1	2.11	-2.75	307.9	201.5	95.2
2019	258.3	43.9	1.19	4.97	119.0	86.4	52.0
2018	-626.5	41.5	1.55	-9.70	315.4	122.2	64.6
2017	-80.1	35.2	1.44	-1.58	298.2	99.6	50.7
2016	-283.0	33.4	1.37	-6.19	227.8	92.9	45.7
2015	-71.1	31.4	1.46	-1.55		93.0	46.0

ROIC of 381.7% appears extraordinary but is distorted by a near‑zero invested capital base, implying the metric is driven more by balance‑sheet accounting quirks than genuine economic returns.
The threefold increase in asset turnover (1.46x to 3.46x) indicates that the company is generating sales with significantly fewer assets, likely due to franchise closures or asset write‑downs that reduce capital intensity.
A cash conversion cycle of -146 days reflects that Winmark receives cash from customers well before it must pay suppliers, a strong liquidity advantage that can fund operations without external financing.
The negative equity multiplier (-0.46) combined with high ROIC suggests the firm is leveraging its minimal equity to produce outsized returns on paper, but this leverage is unsustainable if losses continue.

Watch Out

The inflated ROIC masks a fragile capital structure; a modest rise in invested capital (e.g., from franchise expansion) could drive the ROIC below 100%, eroding the illusion of ultra‑high efficiency and exposing the company to cash‑flow strain.

Profitability & Return on Capital

Winmark Corporation (WINA) — ROIC & Cash Conversion

Return on Invested Capital

Current381.7%

Mean307.3%

Min119.0%

Max394.3%

Range275.3pp

Cash Conversion Cycle

Current-146d

Mean-59d

Min-146d

Max49d

ROIC of 381.7% appears extraordinary but is distorted by a near‑zero invested capital base, implying the metric is driven more by balance‑sheet accounting quirks than genuine economic returns.
The threefold increase in asset turnover (1.46x to 3.46x) indicates that the company is generating sales with significantly fewer assets, likely due to franchise closures or asset write‑downs that reduce capital intensity.
A cash conversion cycle of -146 days reflects that Winmark receives cash from customers well before it must pay suppliers, a strong liquidity advantage that can fund operations without external financing.
The negative equity multiplier (-0.46) combined with high ROIC suggests the firm is leveraging its minimal equity to produce outsized returns on paper, but this leverage is unsustainable if losses continue.

Profitability & Return on Capital

Winmark Corporation (WINA) — Asset Turnover Decomposition

Asset Turnover in Days (2025)

43d

Inventory Days

+

8d

Receivables Days

+

13d

Fixed Asset Days

≈

106d

Total Asset Days

(3.46x turn)

Cash Conversion Cycle (2025)

43d

Inventory Days

+

8d

Receivables Days

−

197d

Payables Days

=

-146d

CCC

Turnover & Days History

Year	Total Asset Days	Inventory Days	Receivables Days	Fixed Asset Days	Payables Days	Cash Conversion Cycle
2025	106	43	8	13	197	-146
2024	121	42	6	16	167	-118
2023	127	29	7	18	129	-94
2022	137	60	9	20	165	-96
2021	126	25	8	23	160	-127
2020	173	8	58	31	137	-70
2019	308	7	75	32	82	-1
2018	235	8	104	4	106	7
2017	253	6	101	3	133	-26
2016	266	7	111	4	140	-22
2015	249	2	118	6	71	49

The sharp decline in ROE from -71.1% to -77.6% is driven primarily by a deteriorating equity multiplier (EM) that improved slightly from -1.55 to -0.46, indicating that the company’s negative equity base is magnifying losses.
Operating margin surged from 31.4% to 48.4%, reflecting stronger pricing power or cost efficiencies; however, because net income remains negative, the margin uplift cannot offset the equity erosion.
Asset turnover more than doubled (1.46x to 3.46x), suggesting that sales are being generated with far fewer assets, likely due to asset disposals or a leaner franchise model, which temporarily boosts top‑line efficiency.
The combination of a high negative ROE and an improving EM signals that the firm’s capital structure is fragile; any further equity dilution would exacerbate loss amplification.

Balance Sheet & Cash Flow Health

Winmark Corporation (WINA) — Balance Sheet

Balance Sheet Items ($M)

Year	Total Assets	Total Liabilities	Total Equity	Total Debt	Net Debt	Cash	Current Assets	Current Liabilities
2025	$25M	$79M	$-54M	$65M	$54M	$10M	$14M	$6M
2024	$27M	$78M	$-51M	$63M	$51M	$12M	$15M	$5M
2023	$29M	$88M	$-59M	$73M	$59M	$13M	$17M	$10M
2022	$30M	$92M	$-62M	$78M	$64M	$14M	$18M	$11M
2021	$27M	$66M	$-39M	$52M	$41M	$11M	$17M	$10M
2020	$31M	$43M	$-11M	$29M	$22M	$7M	$18M	$11M
2019	$62M	$49M	$12M	$35M	$10M	$25M	$41M	$12M
2018	$47M	$51M	$-5M	$35M	$32M	$2M	$24M	$12M
2017	$48M	$79M	$-31M	$69M	$68M	$1M	$21M	$9M
2016	$49M	$56M	$-8M	$45M	$44M	$1M	$23M	$7M
2015	$47M	$78M	$-31M	$66M	$65M	$1M	$24M	$8M

Liquidity & Solvency

7/9

Piotroski F-Score

Strong

18.1

Altman Z-Score

Safe

The current ratio of 2.49 indicates that Winmark holds $2.49 in current assets for every $1 of short‑term liability, providing a comfortable cushion to meet operating cash needs and reducing the risk of liquidity crunches.
A debt‑to‑equity ratio of 1.21, while above the conservative threshold of 1.0, remains modest for a franchise‑based retailer and suggests that leverage is not excessive relative to equity capital.
Interest coverage at 22.31x shows that operating earnings are more than sufficient to service debt obligations, implying low default risk even if earnings volatility rises.
Free cash flow represents 51.95% of revenue, reflecting that over half of sales convert into cash after capex, which supports dividend sustainability and potential reinvestment without external financing.

Balance Sheet & Cash Flow Health

Winmark Corporation (WINA) — Cash Flow

Cash Flow Statement ($M)

Year	Operating CF	Investing CF	Financing CF	CapEx	Free Cash Flow	Buybacks	Dividends
2025	$45M	$-0M	$-47M	$-0M	$45M	$-2M	$-49M
2024	$42M	$-0M	$-43M	$-0M	$42M		$-39M
2023	$44M	$-0M	$-44M	$-0M	$44M		$-44M
2022	$44M	$-4M	$-38M	$-4M	$40M	$-49M	$-19M
2021	$48M	$-0M	$-43M	$-0M	$48M	$-44M	$-33M
2020	$43M	$-4M	$-58M	$-4M	$39M	$-49M	$-14M
2019	$51M	$-9M	$-19M	$-9M	$41M	$-24M	$-3M
2018	$35M	$0M	$-34M	$-24M	$11M	$-2M	$-2M
2017	$25M	$0M	$-25M	$-25M	$-0M	$-50M	$-2M
2016	$26M	$-3M	$-22M	$-26M	$-1M	$-2M	$-2M
2015	$22M	$4M	$-28M	$-22M	$-0M	$-75M	$-1M

Cash Flow Trends

A Piotroski F‑Score of 7 out of 9 places Winmark well above the median, indicating solid profitability, improving cash flow, and prudent asset management.
The Altman Z‑score of 18.10 far exceeds the safety threshold of 2.99, signaling an extremely low probability of bankruptcy and reinforcing confidence in long‑term solvency.
Operating cash flow exceeding net income (OCF/NI = 1.08) confirms that earnings are cash‑backed rather than accrual‑driven, enhancing the reliability of reported profits.

Balance Sheet & Cash Flow Health

Winmark Corporation (WINA) — FCF & Capital Returns

Free Cash Flow Statistics

Buyback & Dividend Trends

A Piotroski F‑Score of 7 out of 9 places Winmark well above the median, indicating solid profitability, improving cash flow, and prudent asset management.
The Altman Z‑score of 18.10 far exceeds the safety threshold of 2.99, signaling an extremely low probability of bankruptcy and reinforcing confidence in long‑term solvency.
Operating cash flow exceeding net income (OCF/NI = 1.08) confirms that earnings are cash‑backed rather than accrual‑driven, enhancing the reliability of reported profits.

Executive Insights & Key Takeaways

Key Takeaways

1Y Return

▼ -10.1%

vs S&P -33.8pp

Revenue 3Y CAGR

▲ +1.9%

5Y: +5.4%

Net Margin

48.4%

▼ 3Y ago: 48.4%

ROIC

381.7%

▲ 3Y ago: 337.5%

FCF Margin

51.9%

▲ 3Y ago: 49.3%

Piotroski

7/9

Strong

Winmark Corp. has underperformed the market over the past year, delivering a -10.1% total return versus the S&P 500's +23.7% gain, resulting in a steep 33.8% excess loss and a max drawdown of 32.2%. Despite this price weakness, the franchise business generates solid operating economics: revenue grew modestly at 5.9% YoY to $86 M, gross margins sit near 96%, and operating margins exceed 63%, translating into an impressive net margin of 48.4% and EPS of $11.30. The balance sheet is robust, with a current ratio of 2.49, low leverage (D/E 1.21), ample interest coverage at 22.3x, and an Altman Z‑score of 18.1 indicating negligible bankruptcy risk. However, profitability metrics are distorted by accounting anomalies—ROE is deeply negative (-77.6%) while ROIC soars above 380% and ROA exceeds 167%, reflecting a capital structure that inflates returns but may not be sustainable. Overall, the company’s high cash‑flow conversion (FCF margin 51.9%) and Piotroski score of 7 suggest operational resilience, yet the volatile equity performance and atypical profitability ratios warrant cautious optimism.

✅ Strengths

Revenue is expanding at a 5.9% YoY rate to $86 M, outpacing its 3‑year CAGR of 1.9%, indicating that franchise sales are gaining momentum despite broader market weakness.
Extremely high gross (96.4%) and operating margins (63.4%) generate a net margin of 48.4% and EPS of $11.30, providing ample cushion for reinvestment or shareholder returns.
Strong liquidity is evident from a current ratio of 2.49 and an interest coverage multiple of 22.3x, which together mitigate short‑term financing risk and support dividend sustainability.
Free cash flow conversion is robust at 51.9% of revenue and operating cash flow exceeds net income by 7.8%, underscoring the business’s ability to generate cash independent of earnings accounting.
Institutional ownership stands at 91.6%, reflecting confidence from large investors and potentially limiting downside volatility due to stable shareholder base.

⚠️ Risks

The stock’s 1‑year return of -10.1% lags the S&P 500 by 33.8% and has suffered a max drawdown of 32.2%, suggesting market perception of elevated risk or growth concerns.
ROE is deeply negative at -77.6% while ROIC spikes to 381.7% and ROA to 167.4%, indicating that the impressive return figures are driven by an unusually low equity base rather than sustainable operating performance.
The cash conversion cycle is severely negative at -146 days, implying that Winmark relies heavily on supplier or franchisee financing; any disruption in this chain could strain working capital.
Beta of 0.527 denotes lower systematic risk but also limited upside participation in bullish market phases, potentially dampening total return potential for growth‑oriented investors.
Leverage, though moderate (D/E 1.21), combined with a negative leverage factor (-0.46) suggests that debt is amplifying earnings volatility, which could become problematic if operating margins compress.

WINA

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Report written 2026-06-07 • Finexus

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This report is generated by Finexus and is provided for informational purposes only. It does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security.

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