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Light at the End of the Tunnel

Stock (Symbol) Stock Price

Buffalo Wild Wings (BWLD)

$76

Data is as of Expected to Report Sector

February 25, 2013

Apr 22

Retail & Travel

Sharek’s Take
David SharekBuffalo Wild Wings has been hampered by high wing prices. Now wing prices have just started to decline. Is this the light at the end of the tunnel? I fell that’s the case. As of this week (week ending March 8) wing prices have fallen from $2.12 to $1.59 — down 25% — in 6 weeks (source: American Restaurant Association). The nice thing is if wing prices are low this year, comparisons to last year are going to be great (because wings were high). Year-over-year profit growth could hit 30% later in 2013.
One-Year Chart
BWLD_2013_Q1You can really see the high 2012 wing prices in the middle of this chart (+5% and +7% profit growth in 2 qtrs). Note profit growth is expected to accelerate to 23% 2QtrsOut. BWLD is really worth 25 times profits, the stock’s undervalued with a P/E of 21.
Earnings Table
BWLD_2013_Q1_EPSSales increased a sparkling 37% last quarter. If profits can keep up later in the year, 30% profit growth should be achievable. Same store sales rose 6% at company stores, 7% at franchises.
 
BWLD has been lowering and missing for three quarters, but that’s in the past.
 
Annual Profit Estimates
fell once again and that trend should turn up next quarter.

 
Quarterly profit looks good past next quarter and I expect these numbers will get better.
Fair Value
BWLD_2013_Q1_FVBWLD is a undervalued and I believe these profit estimates will no doubt increase.
Ten-Year Chart
BWLD_2013_Q1_10yrBWLD can be counted on for sonsistend 20% to 25% growth — both in profits and in stock price. The stock’s on a pullback now.
Power Ranking Bottom Line
Growth Portfolio

9 of 14

Buffalo Wild Wings is gonna have a great 2013. Lower wing prices should push profit growth past 30% later in the year. Investors are already taking notice — the stock’s up from $76 to $85 since this data was compiled a couple weeks ago.
 
BWLD is ranked 9th is the 14 stock Growth Portfolio Power Rankings. It would rank higher if it were still $76.
 I will profbably buy it for the Aggressive Growth Portfolio if it dips into the $70s again.
Aggressive Growth Portfolio

N/A

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