Matthew Waterman
All posts from Matthew Waterman
Matthew Waterman in Brand Power,

Buffalo Wild Wings Coming Down And Probably Due For It

I am in the camp of people who have unfortunately not tried the wings at Buffalo Wild Wings (BWLD). I'm told their good, but I can't comment on the product quality. However, I am familiar with what had been the meteoric rise of the stock price from various news sites. Before today, the stock had not really crossed my radar because as it was shooting upwards, the price/earnings multiple was also very high, and I don't like to invest into companies that are pretty new. For the same reasons I stayed away from Chipotle (CMG)

So, fast forward to now. Net income at the end of last year was flat compared to the year previous, which to us wall street people, infers that the "growth" phase of the business is done, or that possibly the company has saturated it's market, or is now being hit by competition. None of these are good things, and funds will be very quick to sell out of their holdings once a perceived trend of non-growth is spotted. 2 quarters of results usually takes care of that. 

Earnings for the latest period came in at $1.73 a share, missing Wall Street's estimates of $1.77 a share. Since the trend over the last several quarters has not been upward, and we have a simultaneously bad report coming in from Chipotle this week. As of right now, this sector should be considered toxic and I'd wait a little for the dust to settle from earnings season before making any decisions.