Buffalo Wild Wings Soars: Is It Too Late to Buy?

Buffalo Wild Wings stock, Darden Restaurants stock, Ruby Tuesday stock
Image source: Buffalo Wild Wings.

If you were nervous about Buffalo Wild Wings' (NASDAQ: BWLD  ) impressive year-to-date run before, you're probably terrified now. As of Tuesday's close, shares of the chicken-wing connoisseur had already risen by around 78% so far in 2013.

That was, at least, until Buffalo Wild Wings reported quarterly earnings after the market close, which drove the stock up another 11%, to set a fresh all-time high during after-hours trading.

A delicious quarter
So what did the folks at B-Wild say to merit all this optimism?

For one, quarterly revenue rose an impressive 27.9% year over year to $315.8 million, helped by solid same-store sales growth of 4.8% at company-owned restaurants, and 3.9% at franchised locations. For reference, that handily beat analysts' lofty estimates, which called for sales of just $311.6 million.

Better yet, Buffalo Wild Wings' earnings rose an incredible 65.4% from the same year-ago quarter, to $0.95 per diluted share, which also crushed expectations for earnings of $0.85 per share on the same basis.

By comparison, the past several weeks haven't been nearly as kind to several of B-Wild's fellow casual-dining rivals, most notably Darden Restaurants (NYSE: DRI  )  and Ruby Tuesday (NYSE: RT  ) .

Darden, for its part, fell 7% after it disappointed investors late last month by reporting same-restaurant sales had declined 4% and 5.2%, respectively, for its core Olive Garden and Red Lobster concepts. All in all, while Darden managed to grow sales 6.1% year over year, its earnings per share fell 37.6% over the same period as it strived to focus on improving affordability for increasingly cost-conscious consumers. 

Meanwhile, shares of Ruby Tuesday plunged by 18% in a single day earlier this month after the struggling chain swung to a quarterly net loss, hurt badly by its own company-owned same-store sales, which dropped a harrowing 11.4%. At the time, Ruby Tuesday's CEO blamed the overall economy, saying that it "failed to realize any significant improvements [and] adversely affected us and the casual dining industry."

I don't know about you, but I'm guessing that Buffalo Wild Wings doesn't share that negative sentiment.

This is only the beginning 
I can't say that I'm particularly surprised by Buffalo Wild Wings' awesome quarter. After all, just three weeks ago, I went out on a limb to explain why, exactly, I had just personally purchased shares of Buffalo Wild Wings in my own portfolio for the first time.

At the time, I outlined several factors that played into my decision, including Buffalo Wild Wings' new pricing structure, lower chicken wing costs, the imminent onslaught of football season, and its solid long-term growth prospects.

Funnily enough, CEO Sally Smith explained in the company's earnings press release how its lower cost per pound for traditional chicken wings had driven its cost of sales to 30% for the quarter, or the lowest percentage in nearly two years.

In addition, Smith stated that a strong football season so far has driven comps at company-owned and franchised locations higher by 5.3% and 3%, respectively, during the first four weeks of the fourth quarter. She also said that, by the end of the fourth quarter, the company expects to open a total of 46 new locations in the U.S. and Mexico. For those of you keeping track, that will bring the total to nearly 1,000 locations by the end of 2013.

Finally, Smith said they plan on opening around 95 total new locations globally in all of 2014. That includes 85 in the U.S. and Canada, en route to their long-standing goal of having at least 1,700 locations in the two countries within the next 10 years.

Foolish takeaway
While the stock might look expensive on the surface, trading just above 40 times last year's earnings, I'd like to reiterate that investors shouldn't let the price tag scare them away from this solid long-term business.

If anything, just try to remember that truly great stocks have a stubborn tendency of repeatedly setting new all-time highs. In the end, that's why I'm convinced Buffalo Wild Wings has plenty more where today's gains came from.

How about two more global restaurant picks, and an apparel play?
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