Boasting a track record of strong annual growth and a viable strategy, Buffalo Wild Wings (BWLD) is well positioned in our view to attain its annual 25% net income growth over the next three years. A key growth driver will be the company's ability to continue its recent improvement in company-owned average weekly sales and bring it in line with its franchisees.
Despite falling 49% from its 52-week high, BWLD shares still trade at a slight premium to the restaurant growth group. We think the company's high exposure to the price of chicken wings and rising minimum wage rates offset the premium it deserves owing to a unique concept that has delivered consistent annual EPS growth.
Moreover, we would recommend caution in buying restaurant growth stocks while the industry faces significant macro headwinds (consumer spending pressures & rising food and labor costs) with murky visibility to recovery. Therefore, we believe the stock is fairly valued at this juncture.
Despite a flawed development strategy for its company-owned units, BWLD's results have been stable relative to many of its peers with same-store sales that appear to have held up over time. We also think its growth plan is very viable. In turn, we believe management can deliver on its guidance of 25% annual net income growth over the next three years.
Read the full analyst report on BWLD.
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