Order up, investors! Wingmaster Buffalo Wild Wings'
What analysts say:
- Buy, sell, or waffle? Eight analysts are wild enough about this stock to rate it a buy; one holdout rates it a hold.
- Revenues. Analysts expect Buffalo Wild Wings to report 23% revenue growth tomorrow, to $62.7 million.
- Earnings. Profits are predicted to do even better, rising 36% to $0.38 per share.
What management says:
In the February Q4 and full-year 2005 earnings release, CEO Sally Smith pronounced herself "pleased with our continued top-line growth in the fourth quarter, increasing revenue by 21% over the prior year." But there was plenty more to be pleased with, as you'll see below.
What management does:
Margins increased across the board, with gross, operating, and net margins all rising over the last 18 months. The tiny 40-basis point rise in Buffalo Wild Wings' net margins, for example, means that the company is 10% more profitable today than it was a year and a half ago. Combine that with the rising sales that so pleased the CEO, and you've got yourself a company well-positioned to grow its profits faster than sales, just as the analysts are predicting. Smith also mentioned that one of Buffalo Wild Wings' goals this year is to continue improving margins.
|
Margins % |
9/04 |
12/04 |
3/05 |
6/05 |
9/05 |
12/05 |
|---|---|---|---|---|---|---|
|
Gross |
38.4 |
38.3 |
38 |
38.4 |
38.8 |
38.8 |
|
Op. |
6.7 |
6.6 |
6.2 |
6.4 |
6.7 |
7.1 |
|
Net |
3.8 |
4.2 |
4 |
4.2 |
4.4 |
4.2 |
One Fool says:
In the regular October review (subscription required to view this link) of our Motley Fool Hidden Gems recommendations (including Buffalo Wild Wings), Hidden Gems co-analyst Tom Gardner called last year's same-store sales "lackluster." As of February, Buffalo Wild Wings intended to respond to this critique tomorrow by posting same-store sales growth of 4% to 6% at company-owned restaurants and 3% to 5% at franchisees. Let's see how it does.
I'll also be interested in any comments the company has on the trend in chicken prices in the already-begun Q2. The recent protest marches by immigrant workers across the country -- who make up a sizeable proportion of the workforce at some chicken processors -- may have slowed down production. That could well raise the price of chicken for Buffalo Wild Wings. We'll be listening for any indication that this will clip the wings of the firm's hoped-for margin improvement.
Competitors:
-
Applebee's
(NASDAQ:APPB) -
Brinker
(NYSE:EAT) -
Darden
(NYSE:DRI) -
Outback
(NYSE:OSI) -
Ruby Tuesday
(NYSE:RI) -
Champps
(NASDAQ:CMPP)
Fool contributor Rich Smith does not own shares of any company named above.
