On Nov 21, we upgraded our recommendation on
Buffalo Wild Wings Inc.
) from Neutral to Outperform based on better-than-expected
earnings growth and solid top line in the third quarter of 2013.
Moreover, Buffalo Wild Wings carries a Zacks Rank #1 (Strong
Why the Upgrade?
The restaurateur has been consistently posting strong
quarterly results for the past two quarters, driven by its
In its recently concluded third-quarter 2013 results, Buffalo
Wild Wings beat the Zacks Consensus Estimate for both revenues
and earnings. Quarterly earnings also grew 66.7% year over year.
Results in the quarter benefited from decent top-line growth and
margin expansion. Total revenue also increased 27.9% year over
year, led by increased restaurant sales and solid unit
Following a better-than-expected performance in the third
quarter, the company increased its earnings guidance for 2013.
Buffalo Wild Wings now expects net earnings to grow 20% in 2013,
higher than the prior estimate of 17%.
After the release of the third-quarter results, the Zacks
Consensus Estimate for 2013 has gone up 3.0% to $3.75 per share
during the past 30 days. Similarly, the Zacks Consensus Estimate
for 2014 improved 5.2% to $4.69 per share during the same time
Reason for Positive Bias
Along with the strong third-quarter results, the company's
growth story looks attractive. Operating since 1982, Buffalo Wild
Wings is considered as one of the most familiar casual dining
restaurant chains in the U.S., especially among the sports
Amid macroeconomic difficulties and highly competitive
markets, the company has been posting positive comparable store
sales (comps) for the past nine quarters, which validates its
The company has taken various initiatives like aggressive
marketing program, menu launches and guest experience business
model to reinvigorate its potential as a brand. Buffalo Wild
Wings' collaboration with National Collegiate Athletic
Association helps it to increase its visibility as a brand and
attract customers through digital and social media. Foray into
the smaller prototype restaurants, PizzaRev, is also a positive
for the stock.
Other Stocks to Consider
Investors interested in the restaurant industry may consider
Cracker Barrel Old Country Store, Inc.
Bob Evans Farms, Inc.
). All these companies hold a Zacks Rank #2 (Buy).
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