Think-About-It

Buffalo Wild Wings: Costs Are Getting Out of Control

I just reviewed their Cash Flow statements and it is very impressive. This company can internally fund the opening of lots of new stores and cash from operations is over 2x reported earnings. I would never take a short position in this situation.

PERIOD ENDING 28-Dec-08 30-Dec-07 31-Dec-06
Net Income 24,435 19,654 16,273

Operating Activities, Cash Flows Provided By or Used In
Depreciation 23,622 16,933 14,438
Adjustments To Net Income 14,645 5,215 1,236
Changes In Accounts Receivables 375 (1,183) (1,575)
Changes In Liabilities 4,042 7,608 4,145
Changes In Inventories (473) (595) (265)
Changes In Other Operating Activities (539) (4,053) (1,221)

Total Cash Flow From Operating Activities 66,107 43,579 33,031

Buffalo Wild Wings: Costs Are Getting Out of Control

Thanks Njord, I've been thinking about shorting BWLD for a long time but never got around to digging into the details. I view them much like I view Crispy Creams or Boston Market. Just another restaurant selling a commodity that will eventually be valued near the mean of its peer group.

However, while these stocks are in high-growth mode opening lots of new stores I would hold off on shorting them until they saturate their markets or there is a serious identifiable flaw in their business model.