What's Next for Buffalo Wild Wings?
After reporting solid fourth-quarter results, and once again bucking the trend of so many casual dining restaurants, Buffalo Wild Wings stock still sold-off on Wednesday.
While the results were no doubt solid, Wall Street expected more and Goldman Sachs lowered its price target on shares, which sent the stock down over 9%. Still, now is probably not a good time to sell your shares.
This is a rare restaurant, along with fellow heavy-weights Chipotle and Starbucks , that should be depended on to innovate. Three key principles that these restaurants share in common, give me confidence.
Examining the quarter
While many headlines said that the results were "mixed," they were only mixed because analysts expected slightly more revenue. One piece of Foolish advice I'd recommend is to ignore analysts expectations, which are wrong nearly half the time; rather, you should focus on the organic growth of the business in question.
Buffalo Wild Wings bucked the "bad weather" trend that has hammered most retail, and even restaurant establishments, by posting strong comps. The only two names that did as well this quarter are Chipotle, which posted a staggering 9.3% comparable sales figure, and Starbucks posted comparable sales of 6% on a 4% increase in store traffic.
Buffalo Wild Wings same-store sales growth was at 5.2%. While total revenue's came in at 12%, the same-store (or comparable) increase means more. Restaurants are relatively simple businesses to analyze; comparable store sales, new store openings, and overhead costs, will tell you about 90% of the story.
With nice comparable sales and a plan to open 13 franchise restaurants this quarter, Buffalo Wild Wings is doing well. Can it last?
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The article What's Next for Buffalo Wild Wings? originally appeared on Fool.com.Adem Tahiri has no position in any stocks mentioned. The Motley Fool recommends Buffalo Wild Wings, Chipotle Mexican Grill, and Starbucks. The Motley Fool owns shares of Buffalo Wild Wings, Chipotle Mexican Grill, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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