BWLD Market Research & Analysis Report
Updated Jul 24, 2014

Growth and Balance Sheet

BWLD total revenue increased 20.9% to $367.9 million in the first quarter, compared to $304.4 million in the first quarter of 2013. Company-owned restaurant sales for the quarter increased 21.3% over the same period in 2013, to $344.9 million, driven by a company-owned same-store sales increase of 6.6% and 46 additional company-owned restaurants at the end of first quarter 2014 relative to the end of the same period in 2013. Franchise royalties and fees increased 14.9% to $22.9 million for the quarter versus $19.9 million in the first quarter of 2013. This increase is attributed to a franchise same-store sales increase of 5.0% and 55 additional franchised restaurants at the end of the period versus a year ago. For the first quarter, net earnings increased 72.9% to $28.3 million versus $16.4 million in the first quarter of 2013. Earnings per diluted share were $1.49, as compared to first quarter 2013 earnings per diluted share of $0.87.

Valuation

BWLD PE stands at 36.55 above the industry average of 28.02, and above the S&P 500 average of 17.83.  The company is currently trading above the preferable P/E ratio of 15x. BWLD current Price/Sales of 2.25 is above the average of its industry, of 1.94.  The beta of 1.12 implies higher volatility of the stock with respect to the S&P 500. BWLD has shown positive earnings consistency over the last five years. BWLD’s earnings per share over the last five years have increased by 22.80%. The current quarter earnings in comparison to the same quarter last year have increased by 71.26% which is above the required level of 15%.  BWLD’s head to head comparison to its main competitor shows that the company has a gross margin below the average of its main peers, and one that is below the industry average. The operating margin is at the average of the selected peers and the industry. BWLD’s twelve trailing months EBITDA is $212.75 million, above the industry average. The company has a total debt to equity ratio of 7.09. BWLD’s current price levels are above the preferable level is 4% below the 52 week high of $167.36, and the technical indicators are bullish. BWLD has a dividend payout ratio of zero%.

About BWLD

Buffalo Wild Wings, Inc. owns, operates, and franchises restaurants primarily in the United States. It offers chicken and various food and beverage items, as well as serves bottled beers, wines, and liquor. As of February 4, 2014, the company owned and operated, and franchised approximately 1,000 Buffalo Wild Wings locations in 49 states in the United States, as well as in Canada and Mexico. Buffalo Wild Wings, Inc. was founded in 1982 and is headquartered in Minneapolis, Minnesota.

Competitor Comparison

Buffalo Wild Wings Inc. (NasdaqGS:BWLD) N.V.

Highlights

The open layout of its restaurants offers dining and bar areas that provide seating choices for sports fans and families. The Company’s guests have the option of watching sporting events or other programs on its projection screens and approximately 50 additional televisions, competing in Buzztime Trivia or playing video games. [Πλαίσιο κειμένου: 1Tradespoon Score and Outlook: This score conveys Tradespoon’s long-term outlook of 1 to 5 years for a particular stock. Tradespoon uses proprietary methods to rate its trading recommendations on a scale from 1 to 10, with a 10 being the most favorable expected risk and return outlook. To determine a stock’s rating, Tradespoon uses an advanced algorithm that factors in fundamental and technical analysis to determine a stock's expected risk and return.]  The stock closed yesterday’s trading session at $160.86. In the past year, the stock has hit a 52-week low of $94.05 and 52-week high of $167.36. BWLD has a market cap of $3.05 billion and is part of the services sector.

• Low debt    
• Global presence
• Revenue increase   

• Increasing costs and expenses

• Fluctuating prices 

• Growth in same stores sales is slowing

BWLD Intrinsic Value

Stock Valuation Model & Intrinsic Value Definitions

Investors should keep an eye open for stocks that are trading within 10% of their 52-week highs, as it is likely to continue in its upward trend. BWLD's 52 week high is $167.36 current price is $160.86, is 4% below 52 week high.

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which in this model states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. The company has a P/E ratio of 36.55 above the average industry P/E ratio of 28.07 and is above the S&P 500 P/E ratio of 17.83.

When there is strong insider ownership which we define as 8% or more, management is more likely to act in the best interest of the company, as their interests are right in line with that of the shareholders. Insiders own 13.69% of BWLD stock. Management's representation is large enough. This does satisfy our minimum requirement; companies that pass this test are more attractive to our valuation model

The model is using several technical indicators (MACD, RSI, MFI, OBV, position Indicators) to forecast the trend of the stock for 6 and 12 months, and assign a value.

BWLD is trading in the range of $148.26 - $167.36 in the past 30 days. The stock has been showing support at $147.00 and resistance in the $166.00 range. The stock is trading above the 50-Day Moving Average and above the 200-Day Moving Average. The RSI(14) is 59.13. Our indicators give a bullish view on BWLD.

The financial health of the company the higher the better, we evaluate all the financial ratios of the company.

Investor’s sentiment for the stock.

The model assigns a value according to analyst’s recommendation for the stock. Analyst rating on Reuters.com is 6 Buy, 4 Outperform, 10 Hold, 1 Underperform and 1 Sell.

We are searching for EPS numbers that are better than the previous year's. One dip is allowed, but the following year's earnings should be higher than the previous year. BWLD’s annual EPS for the last 5 years were 1.69, 2.10, 2.73, 3.06, 3.79 this type of earnings action is positive.

The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20% or should be less than the average Debt/Equity for its industry. BWLD’s have total debt/equity ratio of 7.09% which is positive.

The EPS growth for this quarter relative to the same quarter a year earlier is above the minimum 15% that this model likes to see for a "good" growth company. Stocks with improving earnings are worthy of your extra attention. BWLD’s EPS growth for this quarter relative to the same quarter a year earlier is 71.26%, above our target.

This stock valuation model looks for annual earnings growth above 12%, but prefers higher than 20%. BWLD’s annual earnings growth rate over the past five years is 22.80%, above the target growth rate.

¹Tradespoon Score and Outlook: This score conveys Tradespoon’s long-term outlook of 1 to 5 years for a particular stock. Tradespoon uses proprietary methods to rate its trading picks on a scale from 1 to 10, with a 10 being the most favorable expected risk and return outlook. To determine a stock’s rating, Tradespoon uses an advanced algorithm that factors in fundamental and technical analysis to determine a stock's expected risk and return.