Is Buffalo Wild Wings Stock a Buy?
A new Buffalo Wild Wings restaurant in Spokane, Wash. Photo by author.
Buffalo Wild Wings finished 2015 on a sour note. Slipping from its high of over $200 a share, it finished out the holiday season down over 20%. The stock dipped more as 2016 progressed and by March 10 was back where it had ended 2015.
Is it time for investors to pile back in? Let's take a look.
Quality at a discount or value trap?Let's compare the company's performance with competitors operating in the restaurant space:
|
Company |
Year-to-Date Stock Performance |
Trailing One-Year Stock Performance |
Performance Since 52-Week Low |
|---|---|---|---|
|
Buffalo Wild Wings |
2.1% |
(14.3%) |
23.3% |
|
McDonald's |
1.1% |
22.8% |
36.6% |
|
Chipotle Mexican Grill |
9.6% |
(21.4%) |
31.4% |
|
Red Robin Gourmet Burgers |
8.4% |
(20.3%) |
21.9% |
|
Yum! Brands |
3.9% |
(5.3%) |
18.3% |
|
Restaurant Brands International |
(2.5%) |
(15.7%) |
26.4% |
|
Panera Bread |
8.2% |
29.4% |
36.7% |
Source: Yahoo! Finance. Data as of early March.
With a few exceptions, it has been a rough 12-month stretch for restaurants, but many of these companies have started to rebound strongly recently. Shares of fast-casual restaurants such as Chipotle and Panera Bread have especially seen strong performance. Buffalo Wild Wings, on the other hand, has been lagging behind the best performers.
This slower stock performance could be an indication of a pessimistic outlook, compared with perhaps a brighter outlook for stocks that have had a higher return. Is that the case here? Let's look at expectations going forward for the same companies:
|
Company |
Current Year Expected Revenue Growth |
One-Year Expected Revenue Growth |
One-Year Expected Earnings Growth |
Five-Year Average Expected Earnings Growth |
|---|---|---|---|---|
|
Buffalo Wild Wings |
18.5% |
12.4% |
19.5% |
19.7% |
|
McDonald's |
(5.3%) |
(6.2%) |
12.1% |
9.5% |
|
Chipotle Mexican Grill |
(0.6%) |
17.3% |
76.3% |
14.7% |
|
Red Robin Gourmet Burgers |
8% |
8.5% |
17.1% |
9.5% |
|
Yum! Brands |
2.9% |
2.2% |
13.8% |
12.2% |
|
Restaurant Brands Intenational |
1.7% |
6.8% |
18.1% |
15.5% |
|
Panera Bread |
4.6% |
8.7% |
18.7% |
15% |
Source: Yahoo! Finance.
There seems to be a disconnect when comparing recent stock performance with company management and analyst guidance. With the exception of Panera Bread, the businesses with the strongest performance as of late don't have the strongest outlook over the next five years. Chipotle has had a strong rebound off hopes of a recovery from the recent E. coli outbreak. McDonald's has had a strong run as of late from a couple of quarterly earnings beats and optimism regarding all-day breakfast, but aside from that, revenue and earnings growth outlooks don't favor a continuation of that trend. The smattering of other restaurant and fast-food businesses listed lag behind expectations for Buffalo Wild Wings for the next one-year and five-year periods.
An opportunity to buy at a discountTrading well below its recent highs and with strong revenue and earnings expectations in the coming years, Buffalo Wild Wings looks to be a good value right now. Comparing it against the backdrop that is the rest of the restaurant industry, the stock appears to be a solid pick for future growth potential over many of their peers. For those looking to make an investment into the restaurant industry, I think Buffalo Wild Wings is an attractive option at these current prices.
The article Is Buffalo Wild Wings Stock a Buy? originally appeared on Fool.com.
Nicholas Rossolillo has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Buffalo Wild Wings, Chipotle Mexican Grill, and Panera Bread. 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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