Buffalo Wild Wings
Wing-slinging restaurant Buffalo Wild Wings (NASDAQ:BWLD) looked to be clipped in July. Shares sank after growing impressively for most of 2011. BWLD looked ready to fall further heading into third-quarter earnings season. Fortunately, B-Dubs delivered the goods.
Last week, the company announced a profit of 61 cents per share in the period, beating the average Wall Street estimate of 59 cents. Revenues also were above expectations. The news sent the stock up about 5% after the report.
For now, things appear to be rolling for BWLD, but is it likely that such strong performance will continue? Higher commodity prices have the potential to reduce profit margins, and the NBA labor strife could negatively impact Buffalo Wild Wings, whose stores are plastered with TVs to draw in their large sports-fan customer base.
Wall Street expects Buffalo Wild Wings to make $2.66 per share in 2011, growing 22% to $3.24 per share in 2012, and BWLD trades for 24 times current-year estimated earnings. The company looks to be at a tipping point. I would be careful with BWLD.
The big winner in the stock market Wednesday was Panera Bread (NASDAQ:PNRA). Shares of the corner baker and sandwich shop were up 15% after the company reported strong results for the third quarter. Panera made a profit of 97 cents per share versus Wall Street estimates of 94 cents. More importantly, the company raised guidance for fiscal 2012 to a range of $5.38 to $5.48 per share.
That sort of growth in profits keeps this momentum stocks moving higher. Thus far, bets that PNRA growth will slow have been too early. When a momentum stock keeps impressing, shares will go up no matter the macro environment. And Panera is up a solid 31% so far this year.
Wall Street expects Panera to make $4.58 per share in 2011. Using the low end of new guidance for 2012 profits, growth for next year will be above 17%. At current prices, including Wednesday’s gains, Panera trades for 29 times current-year estimated earnings. As long as PNRA can continue to beat expectations and raise guidance, this momentum stock should continue to soar.
As of this writing, Jamie Dlugosch did not own a position in any of the aforementioned stocks.