| Stock (Symbol) |
Stock Price |
Buffalo Wild Wings (BWLD)
|
$41
|
| Data is as of |
Expected to Report |
Sector |
August 24, 2010
|
Oct 25
|
Retail & Restaurant
|
| Company Description |
|
Buffalo Wild Wings, Inc. (Buffalo Wild Wings) is an owner, operator, and franchisor of restaurants featuring a variety of menu items, including its Buffalo, New York-style chicken wings spun in any of its 14 signature sauces. Its restaurants includes a multi-media system, a full bar and an open layout. The Company’s guests have the option of watching sporting events or other programs on its projection screens and approximately 40 additional televisions, playing Buzztime Trivia or video games. The open layout of its restaurants offers dining and bar areas that provide seating choices for sports fans and families. Its menu features traditional chicken wings, boneless wings, and other items, including chicken tenders, Wild Flatbreads, popcorn shrimp, specialty hamburgers and sandwiches, wraps, Buffalito soft tacos, appetizers and salads.
|
| Sharek’s Take |
 Buffalo Wild Wings is back on track.In the past, BWLD has proven to be a good invstment at 20 times earnings. But the company is bigger now, so don’t get your hopes up for 40-60% growth again. Buffalo Wild Wings has fluctuating food costs to deal with, and although the company hedges buy signing contracts in advance, quarterly profit growth can come in choppy. I have passed on buying BWLD in the Aggressive Growth Portfolio twice when the stock had a P/E of 20 and each time I’ve regretted it. Past dips in 2008 Q3 and 2008 Q4 were good times to buy. I might have to put BWLD in the Aggressive Growth Portfolio, lets look Inside the Numbers… |
| One-Year Chart |
| Three months ago it looked like profit growth of 5% was coming over the next two quarters. Then late last month BWLD came through with 28% profit growth — way better than the 5% estimate and now with expectations higher, this stock is back on the right track. |
 |
| Profit Growth |
Earnings Table |
| Profits grew 28% last quarter on a 12% rise in revenue%. Overall, very solid. Profit growth has averaged 27% during the last four quarters, but has been between a wide range of 7% and 52%. |
 |
| Beat the Street |
| BWLD beat by 9 cents last quarter. and sales were higher than expected and food (chicken) costs were less than expected. |
| Annual Profit Estimates |
| Annual Profit Estimates increased, but again these numbers can go back-and-forth. Since its getting close to September, I’m starting to think we should start thinking BWLD will make $2.50 next year. |
| Future Quarters |
| Quarterly estimates increased, which helps the stock’s short term timeliness. BWLD is good to own right now, the stock should continue to trend higher. |
| Fair Value |
| Buffalo Wild Wings is certainly worth 25 times earnings over the long term. Lots of numbers in this article suggest a P?E of 25 should be hard to get. I can imaging the stock selling for 30-35 times earnings during periods of 40% plus profit growth (if that happens again).BWLD is undervalued by around 25% right now and could rise 50% by the end of 2011 if these projections work out. I like that the P/E is still low but estimates are increasing. This gives the stock good upside potential. |
| Year |
Profits |
x |
P/E |
= |
Price |
Upside/Downside |
| Today |
$2.07 |
x |
20 |
= |
$41 |
|
| 2010 Fair Value |
2.07 |
x |
25 |
= |
52 |
27% |
| 2011 Fair Value |
2.46 |
x |
25 |
= |
63 |
51 |
|
| Ten-Year Chart |
| Buffalo Wild WIngs’ annual profits have always been up by at least 18% a year since the stock went public. The stock’s decade chart shows a choppy ride higher. The restaurant industry is good right now, so the net leg could be up. This stock is good for the short-run because estimates are rising, its also good for the long-run because the P/E of 20 is lower than the 25 I think the stock is worth. |
 |
| Power Ranking |
Bottom Line |
Growth Portfolio
10 of 17
|
BWLD is the 10th best stock in the 17 stock Growth Portfolio. I like what this stock has going for it, the only reason BWLD isn’t higher is profits are estimated to grow 19% during the next four quarters, on average.I will purchase Buffalo Wild Wings stock for clients the Aggressive Growth Portfolio. BWLD will be 8th best stock in this ten stock portfolio BWLD is back on track. BWLD might not be purchased in focused accounts, those with out available cash or smaller accounts. I will sell Intuitive Surgical (ISRG) from this portfolio to make room. ISRG has been down after this article came out of The New England Journal of Medicine. I will keep ISRG in the Growth Portfolio, which is more long-term. |
Aggressive Growth Portfolio
8 of 10
|
