Sterne Agee's Reasons To Love Buffalo Wild Wings

Courtesy of Benzinga.

In a report published Thursday, Sterne Agee analyst Lynne Collier looks into the restaurant industry and, more specifically, into Buffalo Wild Wings (NASDAQ: BWLD).

Industry Numbers For May

Based on the firm’s regular checks, analysts estimate that casual dining same-store sales through the first fortnight of May “are in positive territory, despite a slow start to the month.”

The experts now expect low-single-digit same-store sales, at levels similar to the previous couple of months. According to the Knapp Track industry benchmark, casual dining same-store sales grew 0.9 percent in March and 1.1 percent in April.

Stock Of The Week

Collier selected Buffalo Wild Wings (Buy rated) as the stock of the week, and shared some takeaways from a few investor meetings Sterne Agee hosted with Mary Twinem, EVP, CFO and Treasurer, and Heather Pribyl, from Investor Relations.

While the analysts “recognize the near-term headwinds (difficult comp laps and high chicken wing prices),” they believe the company’s “unique positioning in the casual dining space will continue to drive outperformance and market share gains.”

“We also believe that the set-up for '16 is attractive given the roll-out of several sales initiatives such as table-top tablets (ultimately gaming, ordering & payment), server handheld devices to expedite ordering and a differentiated loyalty program,” they add.

Below are some additional conclusions from the meetings:

• Long-term EPS growth outlook remains unchanged (18 percent for the current year; 15 percent in the following years).
• The second quarter will see increased advertising.
• A unique loyalty program is expected for 2016.
• Technology initiatives are expected to drive improved labor productivity.
• There’s a “Long Runway of Unit Growth Ahead.”
• Analysts are expecting additional franchise acquisitions over the next couple of years.
• As free cash flow increases, analysts believe “management will consider shares repurchases and the potential for a dividend.”
• International growth is also expected to ramp over the next few years.

Posted-In: Heather PribylAnalyst Color Long Ideas Reiteration Restaurants Analyst Ratings Trading Ideas General