Buffalo Wild: The Rodney Dangerfield of Wall Street

Fair's fair. But when the market treats a stock unfairly, you load up on cheap shares.

Since October 2006, Buffalo Wild Wings (Nasdaq: BWLD  ) has hammered home its operating goals: 15% annual unit growth in 2007, 20% sales growth, and 25% earnings growth. The numbers are in for 2007, and the Buffalo came through on each of these promises.

There are now 493 Wild Wings restaurants scattered across the country, 15% on the nose more than at the end of 2006. Year-over-year revenues for the fiscal year improved by 21.3% after adjusting last year's results for an extra week of sales. Earnings per share took a 30% flying leap on the same basis.

It's not all wine and roses, as the company just barely managed to squeeze by the full-year targets after markedly slower results in the fourth quarter. Still, the report was good enough to reclaim over 9% of the recent stock price drop in a flash.

The whole casual-dining sector has not been treated kindly by the stock market since the "r" word warnings started in earnest last summer, and B-Dub is no exception:

Return Since 6/14/2007

CAPS Rating

BJ's Restaurants (NASDAQ:BJRI)

(15%)

**

Texas Roadhouse (NASDAQ:TXRH)

(15%)

****

The Cheesecake Factory (NASDAQ:CAKE)

(22%)

***

Darden Restaurants (NYSE:DRI)

(35%)

**

California Pizza Kitchen (NASDAQ:CPKI)

(33%)

**

Buffalo Wild Wings

(39%)

****

Ruby Tuesday (NYSE:RT)

(71%)

*

Data from Yahoo! Finance and Motley Fool CAPS.

Despite fulfilling some ambitious growth goals and reaffirming them for another year of supposedly tough macroeconomic times, B-Dub's stock has been falling. In fact, none of these stocks have beaten the S&P 500's 12% decline over that period.

This stock does not get the love it deserves. To reach a 1.0 forward PEG ratio, assuming that B-Dub just meets its growth targets for the next few years, you'd need a $610 million market cap or about $35 per share. That's a 25% discount to fair value by my reckoning. So back up the truck. The market must come to its senses someday, once the Streetwide pessimism abates.

Fair is, after all, fair.

Further Foolishness:


Read/Post Comments (0) | Recommend This Article (24)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 576866, ~/Articles/ArticleHandler.aspx, 8/30/2014 12:43:15 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement