After getting tenderized by the market last quarter for a $0.02-per-share earnings miss, Buffalo Wild Wings (Nasdaq: BWLD) is looking to regain the magic when the company reports fourth-quarter earnings on Tuesday.
While the food and fun at this casual-dining operator remain best-in-class, the stock has been in a bit of a tailspin recently, trading in the mid-20's for the past few months -- down from a high in the mid-40's last summer.
But let's be fair. Nearly every casual-dining restaurant stock is in the doldrums these days. Investors have been shedding the likes of Brinker International (NYSE: EAT), CBRL Group (Nasdaq: CBRL), and Ruby Tuesday (NYSE: RT) faster than you can say, "Check, please." In this type of market, higher-multiple stocks like B-Dubs are bound to hit a few speed bumps.
So, is the party over for Buffalo Wild Wings? Or is the stock simply taking a breather, preparing to roar back?
What Fools say:
Here's how BWLD scores against some of its competitors in CAPS:
|
Market Cap
(Millions)
|
Trailing P/E
Ratio |
CAPS Rating
|
|
Buffalo
Wild Wings
|
$ 418
|
20.7
|
****
|
|
Texas
Roadhouse (Nasdaq: TXRH)
|
$ 790
|
20.3
|
****
|
|
Darden Restaurants (NYSE: DRI)
|
$ 3,850
|
19.7
|
**
|
|
Brinker Int'l
|
$ 1,830
|
9.0
|
**
|
|
Ruby Tuesday
|
$ 373
|
7.2
|
*
|
Data taken from Motley Fool CAPS on Feb. 10.
CAPS players rate the stock to outperform by an overwhelming 23 to 1 margin. Skimming players' posts, I see comments on the company like "sustainable growth, self-financed growth," and "zero long-term debt and ... high returns on equity." But there are a lot of CAPS players who simply think Buffalo Wild Wings is a great eatery. Consider this post from smoky77211.
What analysts say:
Wall Street analysts are neutral on B-Dubs, with nine out of 13 analysts rating it a hold. One advises a buy, and three suggest a sell. Over the past year, analysts have downgraded the stock seven times, compared to only two upgrades.
The consensus analyst EPS estimate for the fourth quarter is $0.31, down 20% from $0.39 during last year's blazing fourth quarter. But last year, the company enjoyed a $0.16-per-share boost from an extra week, which happens once every four years for the B-Dub, so on a comparable calendar basis, earnings per share will rise a hefty 35%.
One Fool says:
Another earnings stumble would likely drive the stock lower in the short term. Mr. Market hasn't responded kindly in recent months to surprises. But a longer-term view would suggest that companies with a winning business model are great stocks to own, particularly when financial markets are suffering from indigestion.
I expect casual-dining restaurant stocks are in for a rocky ride for the next six months, so I'm not a buyer of B-Dubs in anticipation of a significant earnings "beat." But I'm keeping a close eye on my favorite picks in the sector. Buffalo Wild Wings is an exceptionally well-managed company that has fine-tuned a winning formula with consumers. Eventually, I expect the stock to regain its former high-flyer status, as the market realizes that nothing in this company's business model has changed fundamentally.
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