Buffalo Wild Wings - A Raw Value Update
Back in February, Wax Ink did a small piece on Buffalo Wild Wings, Inc. (Nasdaq: BWLD). The post contained a bit of information about the company, and my worksheet. Now that the company has filed its SEC Form 10-K for fiscal 2008, I thought it would be a good time to update my worksheet.
On the positive side, the company ended the year with $0 Debt, $34.5 million in Cash and Marketable Securities, and a 22% increase in year over year Sales. In addition, Free Cash Flow for fiscal 2008 was $2.07, compared with $1.40 for fiscal 2007, a 48% year over year increase.
On the negative side, the company's Working Capital Ratio declined by 58%, its Quick Ratio declined by 46%, and there was a negligible increase, about 5%, in Return on Invested Capital.
Accordingly I have adjusted my Reasonable Value Estimate for the stock to $35.32, setting my Buy Target at $17.66, my First Sell Target at $34.44, and my Close Target at $37.28.
However, because I believe that the greater economy has not yet seen the full impact of the current economic downturn, I think a lowered entry point for the stock is warranted. Accordingly, I have lowered my Buy Target from $17.66, to $12.24.
Like last year, I still think the PE is too high, ending fiscal 2008 at 17.44, down from 18.03 for fiscal 2007, and as I have said many times, once the PE for a stock climbs above 15, my interest wanes.
So enjoy a cold beer and a few spicy wings anytime you're in the mood, but wait for a cheaper stock price.
Wax Buffalo Wild Wings2008.pdf