Why Buffalo Wild Wings' Shares Cooled Off

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of wing-slinging restaurant Buffalo Wild Wings (NAS: BWLD) were ice cold today, falling as much as 13% in intraday trading after the company announced second-quarter results.

So what: It's earnings season ,and that means that any company unfortunate enough to miss earnings expectations is bound to see its stock take a drubbing. And that's exactly what happened to Buffalo Wild Wings. Revenue for the second quarter increased 30% from last year, hitting $239 million. Earnings per share, meanwhile, clocked in at $0.62, up from $0.58 last year. Analysts, however, had been looking for per-share profit of $0.68 on revenue of $240 million.


Now what: Forget the rain: Blame it on the chicken wings. Prices for chicken wings -- not surprisingly a key input cost for B-Wild -- rose drastically from last year, putting pressure on the company's bottom line. Buffalo Wild Wings has tried to pass some of the costs through to customers with price increases, but that's a tough proposition when consumers aren't exactly feeling happy-go-lucky.

The good news here is that B-Wild's quarter showed that it's still a successful, growing restaurant chain despite the economy and its significant chicken challenges. On the other hand, unless the economy or chicken wing prices (or both) turn around soon, the headwinds could continue and may put more pressure on the stock.

Want to keep up to date on Buffalo Wild Wings?Add it to your Watchlist.

The article Why Buffalo Wild Wings' Shares Cooled Off originally appeared on Fool.com.

The Motley Fool owns shares of Buffalo Wild Wings. Motley Fool newsletter services have recommended buying shares of and writing covered calls on Buffalo Wild Wings. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferhas no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter,@KoppTheFool, or onFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

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