Zacks' Bull Of The Day: Buffalo Wild Wings

May.21.14 | About: Buffalo Wild (BWLD)

Looking for a fast growing restaurant chain which wasn't impacted by the brutal winter weather? Buffalo Wild Wings, Inc. (NASDAQ:BWLD) recently raised full year guidance after a strong first quarter and momentum into the second quarter.

Buffalo Wild Wings operates 1,010 Buffalo Wild Wings restaurant locations across the United States, Canada and Mexico. It also recently opened its first PizzaRev franchise in suburban Minneapolis. Buffalo Wild Wings will be operating several franchises of the California-based build-you-own artisanal pizza chain in the Minneapolis area.

Big Beat of the Zacks Consensus Estimate in Q1

On Apr 28, Buffalo Wild Wings reported its first quarter results. Despite polar vortexes and a brutal winter in two-thirds of the United States during the quarter, the company blew by the Zacks Consensus Estimate by 10%. Earnings were $1.49 compared to the consensus of $1.35.

Revenue rose 20.9% to $367.9 million.

Many restaurants and retailers have blamed the brutal winter for lower same store sales comps in the first quarter but that wasn't Buffalo Wild Wings' problem. Same restaurant sales were higher than expected, rising 6.6% system wide with franchises up 5%.

The quarter was aided by the shift to Easter in the second quarter, strong sports viewership and lower wing prices.

2014 Earnings Guidance Raised

The second quarter got off to a strong start, keeping the first quarter momentum despite the Easter holiday. The company said same restaurant sales were up 5.7%, with franchises up 4.4%.

Commodity inflation, excluding lower wing prices, is expected to be flat for the rest of the year.

Given the trends, Buffalo Wild Wings raised its 2014 guidance to earnings growth of 25% from its prior guidance of 20%. That translates into earnings of about $4.75.

The analysts are even more bullish. 17 estimates have moved higher over the past 30 days pushing the Zacks Consensus up to $5.09. That would be earnings growth of 34.3%.

Buying Opportunity?

Despite the good news, shares of Buffalo Wild Wings have stalled out in 2014.

It's trading with a forward P/E of 27.8, which isn't cheap, but you're paying for the growth. It is expected to have double digit earnings growth both this year and next.

Shares are also trading near the company's 10-year median forward P/E of 25.7.

Buffalo Wild Wings is a Zacks Rank #1 (Strong Buy).

For investors looking for a fast growing restaurant name with solid fundamentals, Buffalo Wild Wings is one you'll want to keep on your short list.