Buffalo Wild Wings Going Strong on Initiatives - Analyst Blog


On Mar 28, 2014, we issued an updated research report on Buffalo Wild Wings Inc. ( BWLD ).

On Feb 04, this casual dining reported mixed fourth quarter results with earnings beating the Zacks Consensus Estimate and revenues missing the same. Adjusted earnings of $1.10 per share for the fourth quarter grew 23.6% year over year driven by strong margins due to lower cost of sales. Cost of sales ratio declined 220 basis points owing to lower wing costs.

Total revenue increased 12.4% year over year to $341.5 million driven by comps and new unit openings. Comps grew 5.2% in the quarter better than the previous quarter owing to menu price increases. However, the top line missed the Zacks Consensus Estimate of $345.0 million by 1.0%.

The company has been consistently posting positive comps for the past two years.  We are encouraged by the company's strong market standing, new menu launches and increased media exposure. Buffalo Wild Wings remains better positioned than many of its peers on the back of menu innovation, better food presentation and operational efficiency.

Moreover, its association with the NCAA increases its visibility as a brand. Apart from this, the company also stresses on advertising initiatives, installing new point-of-sales programs, improving supply chain management, remodeling initiatives and its loyalty program to augment sales. We believe these initiatives will contribute robustly to Buffalo Wild Wings' business in the near future.

In fact, the company expects net earnings growth of 20% in 2014 driven by comps growth and continued operational efficiency. Due to the decent performance and optimistic outlook, estimates for both 2014 and 2015 have largely moved upwards over the last 60 days.

However, like other restaurant chains, this Zacks Rank #2 (Buy) company is also experiencing macroeconomic headwinds. Government budget cuts, high tax rates and still-tightened credit availability continue to hurt consumer discretionary spending. Moreover, Buffalo Wild Wings' limited international presence is a matter of concern.

Other Stocks to Consider

Some other stocks worth considering in the restaurant industry include Ignite Restaurant Group, Inc. ( IRG ), The Wendy's Company ( WEN ), Burger King Worldwide, Inc. ( BKW ). While Ignite Restaurant and The Wendy's sport a Zacks Rank #1 (Strong Buy), Burger King Worldwide holds a Zacks Rank #2 (Buy).

BURGER KING WWD (BKW): Free Stock Analysis Report

BUFFALO WLD WNG (BWLD): Free Stock Analysis Report

IGNITE RESTRNT (IRG): Free Stock Analysis Report

WENDYS CO/THE (WEN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BKW , BWLD , IRG , WEN



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