Buffalo Wild Wings Impresses, Again

Oct.19.11 | About: Buffalo Wild (BWLD)

Buffalo Wild Wings (NASDAQ:BWLD) reported strong third-quarter results Wednesday that showed impressive revenue and earnings expansion. We continue to believe in the long-term growth story of “B-Dubs” and would add to our position in our Best Ideas portfolio on any significant weakness in the shares. Our $74 fair value estimate remains unchanged. Our full report supporting our fair value estimate can be found here.

Total revenue for the third quarter increased over 30% on the heels of a 5.7% same-store sales increase in company-owned restaurants and a 4.2% jump at franchised restaurants (the company had 44 additional company-owned restaurants and 41 additional franchised restaurants at the end of the quarter versus the prior-year period). Average weekly sales for company-owned restaurants were up 11.4% in the period, while the measure advanced 4.8% for franchised locations – both solid increases. The firm’s net earnings expanded 32.5%, while earnings per diluted share jumped nearly 30% to $0.61, extremely strong performance. Buffalo Wild Wings noted that it will reach its goal of 13% unit growth for 2011 and is confident that 12% unit growth in 2012 is achievable. We continue to believe that management’s expectation for the long-term restaurant potential of its chain is conservative.

Importantly, the firm noted that same-store sales for company-owned and franchised restaurants are increasing at an accelerated pace of about 8.3% and 6.7%, respectively, so far through the fourth quarter. This trajectory of same-store-sales performance is absolutely fantastic. Buffalo Wild Wings also noted that it is confident that net earnings growth will be in excess of 23% for 2011 and 20% in 2012, suggesting continued momentum. We continue to think the firm is one of our best ideas.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.