David Stahl
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David Stahl in Stocks for Real Men,

Should Buffalo Wild Wings Consider Refranchising?

Wedbush believes refranchising is a realistic alternative path to value creation for Buffalo Wild Wings 's shareholders if the management's current strategy of comp reacceleration and 20 percent unit-level margins fail to materialize.

The firm's analysis of a theoretical model in which 80 percent of Buffalo Wild Wings is franchised, in line with current industry standards, gives higher valuation than its current stock price.

The firm sees near-term EPS upside, thanks to food costs tailwinds, non-COGS expense management and second half outperformance relative to lowered expectations. The company will benefit in 2017 from many comp initiatives such as the roll out of half price wing Tuesdays, Lunch throughput, online ordering/takeout remodels, loyalty and various technology implementations, the firm noted. Citing expense opportunities, the firm said it believes the company might be targeting 20 percent unit level margins.