Buffalo Wild Wings shares fall 9.7 percent

  • Article by: MIKE HUGHLETT , Star Tribune
  • Updated: February 5, 2014 - 9:24 PM

High expectations collided with growth concerns.

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Buffalo Wild Wings shares fell 10% after the company's expectations for 2014 came in below lofty expectations.

Despite strong quarterly profits, Buffalo Wild Wings Inc.’s stock got hammered Wednesday, trading down almost 10 percent.

The likely culprit: apprehension over growth rate coupled with a lofty stock price.

Buffalo Wild Wings released its fourth-quarter financials after the market closed Tuesday, reporting profit growth of 25 percent over last year, topping analysts’ estimates.

Sales grew 12 percent. But that was short of analysts’ estimates, which also likely hurt the stock. Buffalo Wild Wings’ shares closed Wednesday at $127.12, down $13.63, or 9.7 percent.

The Golden Valley company has one of the hottest U.S. restaurant concepts, and its stock is up about 65 percent over a year ago, even with Wednesday’s sell-off. Thus, profit taking could also have been a factor Wednesday.

Some investors may be disappointed that Buffalo Wild Wings forecast “only” 20 percent earnings growth in 2014, said Bryan Elliott, a stock analyst at Raymond James.

The wholesale price of chicken wings — one of the company’s prime inputs — is low, and some may think that 20 percent-plus growth is warranted, he said.

Brian Bittner, a stock analyst at Oppenheimer, wrote in a research report Wednesday that Wall Street on average is looking for 26.5 percent earnings growth in 2014. Buffalo Wild Wings has “executed well” and is off to a good start this year, Bittner wrote.

Elliott said that in his view, Buffalo Wild Wings’ “growth story” hasn’t lost any luster. “There is nothing wrong with this company,” he said. “It had a really solid quarter.”

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