The Company is an owner, operator and franchisor of restaurants featuring a variety of boldly-flavored, made-to-order menu items including Buffalo, chicken wings etc.
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BWWs has been beaten down recently over
- Concerns about bird flu
- Concerns about wing prices (and also corn chicken feed) which are increasing but I believe tend to peak in Feb. This is a real concern. Management needs to be able to rise prices to ensure wing prices aren't a drag on earnings.
- Downgrades by analysts and the likes of Cramer - These downgrades seem mainly based on valuation concerns.
This is a well run company with competent management who have a lot of experience and seem able to rectify mistakes and problems.
No debt and 56M (14% of share price) in cash the company is growing its stores through franchises and though earning from existing stores without taking on debt. With an average price of 1.265M to open a new store there is plenty of room for expansion of just the company owned stores.
Small with market cap of 419M – They are type of company I like, small with lots of room to grow. The store concept is often compared to Applebees.
Management thinks it can open 1000+ stored from 412 (134 franchise and 278 BWW owned) today. Seems highly possible given the north east and south west have negligible stores at present and out of those stores 83 are in Ohio.
Have a full position in this company in my portfolio - thought now it is trading close to its low end P/E trading range would be a good time to buy it in CAPS, although would not be surprised to see it drop a bit more tomorrow after earnings depending on future revenue projections associated with increased prices of wings, but with the 20% + drop from it's January highs I'm hoping any disappointing factors are built into the stock before earnings.
Other concern is a recognizable moat and the ability to lock out competitors, it’s had a head start over the competition though and doesn’t appear to have any meaningful competition at the moment, but this is something to keep an eye on.
This is a stock I want to hold on to for the long term 5 years +