The Craft Supply Stock That Checks Every Buffett Box: Cricut's Perfect 9/9

What Is Cricut?

Cricut is the company behind the smart cutting machines that have become a staple in the crafting, DIY, and small business world. Founded in 1969 as Provo Craft, the company rebranded as Cricut and went public in 2021. Its machines — including the Cricut Maker, Explore, and Joy lines — cut vinyl, paper, fabric, leather, and dozens of other materials with precision, enabling everything from custom T-shirts to wedding decorations to Etsy storefronts.

The business model is a classic razor-and-blade setup amplified by a digital platform. Cricut sells the hardware (the razor), then generates recurring revenue from materials, accessories, and — critically — its subscription platform, Cricut Access. Cricut Access gives users a library of over 200,000 images, fonts, and ready-to-make projects for a monthly fee. As of Q3 2025, the company had over 3 million paid subscribers, growing 6% year over year.

Cricut operates in three revenue segments: Connected Machines, Subscriptions, and Accessories & Materials. In its most recent quarter (Q3 2025), total revenue was $170.4 million with net income of $20.5 million. The company generated $714.5 million in trailing twelve-month revenue, ended the quarter with $207 million in cash, and carries no debt. It has been profitable for eight consecutive years.

How Cricut Scores on All 9 Buffettology Criteria

Cricut earns a perfect 9/9 on the Buffettology scoring system — a rare achievement, particularly for a small-cap company. Here's how it performs on each criterion.

1. High Return on Equity — PASS (19.9%)

Buffettology requires ROE above 12%. Cricut's 19.9% ROE clears the bar comfortably. This reflects a business that generates healthy profits relative to its equity base without relying on financial leverage to inflate the number — since the company carries virtually no debt.

2. High Return on Invested Capital — PASS (18.7%)

ROIC measures how efficiently a company uses all its capital to generate returns. The threshold is 9%. Cricut's 18.7% ROIC means the company is generating nearly $0.19 in operating profit for every dollar of invested capital — a sign of genuine business quality, not financial engineering.

3. Cash Machine — PASS (35.6% FCF/Assets)

This criterion checks whether the company converts its asset base into free cash flow. At 35.6%, Cricut turns more than a third of its total assets into free cash flow annually. That's an exceptional conversion rate, driven by the high-margin subscription business and minimal capital requirements. Trailing twelve-month free cash flow stands at roughly $200 million.

4. Fair Valuation — PASS (8.5% Earnings Yield)

The earnings yield (inverse of P/E) must exceed 3.5%. Cricut's 8.5% earnings yield is more than double the threshold. At a trailing P/E of around 12x, the stock is priced modestly relative to its earnings power — especially for a business with recurring revenue and high margins.

5. Share Buybacks — PASS (-0.8% Share Dilution)

Buffett favors companies that shrink their share count rather than diluting shareholders. Cricut's share count is declining at 0.8% annually, a modest but positive signal that management is returning capital through buybacks.

6. Defensible Moat — PASS (54.3% Gross Margin)

Gross margins above 40% indicate pricing power and a competitive moat. Cricut's 54.3% gross margin reflects the profitability of its subscription platform and accessories business, where margins are significantly higher than on hardware. The subscription segment alone generates gross margins in the 80% range.

7. Simple Business — PASS

Cricut sells cutting machines, materials, and a design software subscription to crafters and small business owners. It's a straightforward business model that anyone can understand — you buy the machine, then you keep buying materials and paying for the software.

8. Conservative Debt — PASS (0.03x Debt/Equity)

The threshold is 1.5x. Cricut's debt-to-equity ratio of 0.03x is essentially zero. The company has $207 million in cash and virtually no debt. This is one of the cleanest balance sheets you'll find at any market cap.

9. Consistent Growth — PASS (64.9% Five-Year Growth)

Five-year net income growth must be positive. Cricut has grown earnings by nearly 65% over the past five years, benefiting from the pandemic-era crafting boom and the subsequent build-out of its subscription business.

The Bull Case

Despite analyst skepticism, the numbers tell a more nuanced story. Here's what bulls are focused on:

The subscription flywheel is working. Cricut Access surpassed 3 million paid subscribers in 2025, growing 6-7% year over year. Subscription revenue carries gross margins in the 80% range, and the recurring nature of the revenue stream provides visibility that hardware sales can't match. As the installed base of machines grows, the subscription conversion opportunity compounds.

The balance sheet is a fortress. With $207 million in cash, zero debt, and nearly $200 million in annual free cash flow, Cricut has extraordinary financial flexibility for a $1 billion company. The company recently introduced a substantial dividend ($0.95 per share, yielding roughly 21%), returning significant capital to shareholders while still generating excess cash.

Profitability is improving. Despite flat-to-modest revenue growth, Cricut has been expanding margins. Q3 2025 net income surged 79% year over year on just 2% revenue growth. Q2 2025 showed similar dynamics — EPS up 22% on 2% revenue growth. The company is becoming more efficient, not less.

The valuation is undemanding. At a trailing P/E of roughly 12x and a P/FCF of under 5x, Cricut is priced like a declining business — but it's actually growing. The EV/EBITDA ratio of 7.6x and EV/FCF of 3.8x are deep value territory for a company with consistent profitability and a sticky subscription model.

The razor-and-blade model creates stickiness. Once a customer owns a Cricut machine, they're locked into the ecosystem for materials, accessories, and software. Switching costs are meaningful — users invest in learning the design software, building project libraries, and accumulating compatible materials.

The Bear Case

The analyst consensus is bearish for real reasons. Here's what concerns the skeptics:

Revenue growth has stalled. Full-year 2024 revenue declined 7% to $712.5 million. While 2025 has shown modest 2% growth, Cricut is far from the high-growth trajectory that characterized its early public life. The pandemic pulled forward demand for crafting machines, and the hangover has been prolonged.

Analysts are uniformly negative. Zero analysts have a buy rating on the stock. The consensus is Strong Sell, with an average price target of $3.60-$4.06 — well below the current trading price. When no professional analyst is willing to recommend a stock, it's worth understanding why.

The addressable market may be limited. Smart cutting machines are a niche product. Unlike smartphones or laptops, not everyone needs one. The core demographic — crafters, scrapbookers, and small craft-business owners — may already be largely penetrated, limiting the growth runway for new machine sales.

Accessories revenue is declining. Q3 2025 accessories and materials revenue dropped 17% year over year. If the razor-and-blade model is the thesis, declining blade revenue is a direct headwind. This could signal that the installed base is becoming less engaged or finding cheaper third-party alternatives.

Consumer spending risk. Cricut's products are discretionary purchases. In a challenging consumer spending environment, craft supplies and subscription add-ons are early candidates for household budget cuts.

Valuation Overview

Cricut's valuation presents an unusual profile — deep value metrics alongside bearish analyst sentiment:

The trailing P/E ratio of 12.3x and forward P/E of 23.9x suggest that earnings are expected to decline in the near term, which partially explains analyst caution. The price-to-sales ratio of 1.35x and price-to-book of 2.68x are modest for a profitable tech-adjacent company.

The standout metric is the P/FCF ratio of just 4.8x, meaning investors are paying less than 5 years of free cash flow for the business. The FCF yield of roughly 21% — combined with a dividend yield of approximately 21% — signals that management is returning nearly all free cash flow to shareholders.

The EV/EBITDA of 7.6x and EV/FCF of 3.8x place Cricut firmly in value territory. Enterprise value metrics are especially low because the company's net cash position reduces EV significantly.

Analyst price targets range from $3.00 to $5.78, with a consensus around $3.60-$4.06. The stock is currently trading above these targets, which is an unusual and cautionary signal. Some valuation models suggest the stock is overvalued by roughly 25% relative to analyst consensus.

The disconnect between the stock's fundamental quality metrics (profitability, cash generation, balance sheet strength) and its analyst reception (unanimous sell ratings) creates an interesting tension. Either the market is right that growth limitations will erode the business, or analysts are undervaluing a durable cash-generating franchise.

The Buffettology Verdict

Cricut's perfect 9/9 Buffettology score highlights a business with genuine quality characteristics: strong returns on capital, exceptional cash generation, a clean balance sheet, and a sticky subscription model. It's one of the few small-cap companies that checks every Buffett box.

The tension here is between business quality and growth trajectory. The Buffettology framework rewards what the company is — profitable, well-managed, and financially sound. The analyst consensus focuses on where the company is going — a potentially limited addressable market with decelerating revenue. Both perspectives contain truth.

For investors who weight quality and cash generation over growth, Cricut's profile is compelling at current valuations. For those who need a clear growth catalyst, the story is less convincing. Either way, the underlying business metrics are hard to argue with.

Want to see Cricut's live Buffettology score with the latest data? Check CRCT on Buffett Score.

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