A little warmer weather, a little plumper bird, a little less wing count per pound, and Whammo! Your stock takes a pounding like a slab of beef on the business end of a butcher's mallet.
Wings-and-beer joint Buffalo Wild Wings
Yet at $30 a share now, it might be the time to belly up to the bar and order a wing or two. The market is valuing the stock at about 27 times current year's earnings and 21 times next year's. Or looked at another way, the market is suggesting a 1.32 price-to-sales ratio for Buffalo Wild Wings in 2008, well below its trailing-12-month historical average. Compare that to ailing Applebee's
The third quarter saw revenues rise to $82.4 million on the strength of a 20% increase at company-owned locations. Same-store sales at those restaurants rose 8.8% compared to a still respectable near 6% increase at franchised locations. Consider that analysts expect sales to remain essentially flat and earnings to fall 20% at Jack in the Box
In reality, the market's reaction really shouldn't be a surprise to investors who've been with B-Dubs for any appreciable length of time. When it missed earnings by a penny last year, it dropped 10% in price only to surge again the following quarter, when it beat expectations.
The company did miss this quarter's analysts estimates, and the market has fried its stock as a result. But it's still on target to hit management's annual goals of 15% unit growth, 20% sales growth, and 25% EPS growth, which suggests to this Fool that wings and beer should not be the only thing on an investor's menu.
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