Apr 08, 2016 Zacks Rank 3-Hold Buffalo Wild Wings Inc. (NASD: BWLD) $144.76 USD ( As of 04/07/16 ) Style:Value: Growth: Momentum: VGM: Data Overview Summary 52 Week High-Low $205.73 - $139.30 Buffalo Wild Wings’ fourth-quarter earnings of $1.32 per share surged 23.4% year over year but missed the Zacks Consensus Estimate by 10%. Earnings were hurt by 20 Day Average Volume 557,180 lower-than-expected comps in the quarter. While revenues missed the consensus Beta 0.78 mark by 3.7%, it increased year over year. Comps rose 1.9% in the quarter, softer Market Cap 2.71 B than last quarter as well as year-ago quarter due to the unfavorable impact of Dividend / Div Yld $0.00 / 0.00% calendar shifts. Nonetheless, the company enjoys strong fundamentals including strong market standing, new menu items and increased media exposure. Also, the Industry RETAIL-RESTRNTS company’s associations with the NCAA and beverage chains have been increasing Industry Rank 71 / 265 (Top 27%) its brand awareness. However, higher labor costs and other expenses related to the Growth Score company’s initiatives are expected to keep profits under pressure. Hist. EPS Growth (3-5 yrs) 19.79% Proj. EPS Growth (F1/F0) 23.38% Elements of the Zacks Rank Curr. Cash Flow Growth 15.59% Agreement Estimate Revisions (60 days) Hist. Cash Flow Growth (3-5 yrs) 23.46% Current Ratio 0.75 100% 50% 67% 50% Debt/Capital 9.76% Net Margin 5.24% Q1 (Current Qtr) Q2 (Next Qtr) F1 (Current Year) F2 (Next Year) Return on Equity 14.95% Revisions: 3 Revisions: 2 Revisions: 3 Revisions: 2 Sales/Assets 1.91 Up: 0 Down: 3 Up: 1 Down: 1 Up: 1 Down: 2 Up: 1 Down: 1 Proj. Sales Growth (F1/F0) 18.62% Magnitude Consensus Estimate Trend (60 days) Value Score Cash/Price -9.23 EV/EBITDA 10.41 PEG Ratio 1.34 Price/Book (P/B) 4.21 60 30 7 Current 60 30 7 Current 60 30 7 Current 60 30 7 Current Price/Cash Flow (P/CF) 12.40 Days Days Days Days Days Days Days Days Days Days Days Days Q1 -0.55% Q2 0% F1 0% F2 -0.14% P/E (F1) 23.63 Price/Sales (P/S) 1.50 Upside Zacks Consensus Estimate vs. Most Accurate Estimate Earnings Yield 4.23% Debt/Equity 0.11 Cash Flow ($/share) 11.69 Momentum Score Most Accurate: 1.72 Most Accurate: 1.42 Most Accurate: 6.16 Most Accurate: 7.57 Daily Price Chg 0.11% Zacks Consensus: 1.81 Zacks Consensus: 1.42 Zacks Consensus: 6.13 Zacks Consensus: 7.35 1 Week Price Chg 0.03% Q1 -4.97% Q2 0.00% F1 0.49% F2 2.99% 4 Week Price Chg -10.28% Surprise Reported Earnings History 12 Week Price Chg -5.37% 52 Week Price Chg -20.99% 20 Day Average Volume 564,495 (F1) EPS Est Wkly Chg -0.08% (F1) EPS Est Mthly Chg -4.47% Reported: 1.32 Reported: 1.00 Reported: 1.12 Reported: 1.52 Average 4 Qtr Surprise (F1) EPS Est Qtrly Chg 1.42% Estimate: 1.47 Estimate: 1.28 Estimate: 1.26 Estimate: 1.66 Q End 12/15 Q End 09/15 Q End 06/15 Q End 03/15 (Q1) EPS Est Mthly Chg -0.18% © 2016 Zacks Investment Research, All Rights Reserved 10 S. Riverside Plaza Suite 1600 · Chicago, IL 60606 The data on the front page and all the charts in the report represent market data as of 04/07/16, while the reports text is as of 04/08/2016 Overview Founded in 1982 and headquartered in Minneapolis, MN, Buffalo Wild Wings Inc. was previously known as Buffalo Wild Wings & Weck (BW-3). As of Dec 27, 2015, the company operated 596 company-owned restaurants, including 590 Buffalo Wild Wings, 2 PizzaRev, and 4 R Taco restaurants in the United States and Canada. Additionally, the company franchised 579 restaurants, including 573 Buffalo Wild Wings restaurants and 6 R Taco restaurants. Open until 2 am, the restaurant menu features chicken wings, hamburgers, sandwiches, appetizers, salads and other items. Zacks Equity Research: BWLD www.zacks.com Page 2 of 9 Reasons To Buy: Leveraging the Power of a Strong Brand: Buffalo Wild Wings is one of the most popular Sales initiatives like menu casual dining restaurant chains in the U.S. The restaurant is famous for its bar concept innovation, promotional and ‘dine and watch game’ facility and offers a full bar and up to 40 television sets per offers, better food outlet. Buffalo Wild Wings is not only famous among sports enthusiasts but also among presentation and families as kids can watch TV or play video games at the restaurants. operational efficiency would continue to aid Apart from sales initiatives, the acquisition of franchised restaurants is contributing to revenues. the revenues. Unlike most of its peers, Buffalo Wild Wings remains focused on company-owned restaurants that allow it to have full control over operations and also keep profits. In 2015, Buffalo Wild Wings purchased several franchises that are expected to deliver sales and earnings growth in 2016. In addition, it continued to build new restaurants, remodel existing locations, and invest in Guest Experience. Consistent Unit Expansion; Investment in Growing Businesses: Buffalo Wild Wings’ store opening momentum remains unruffled amid an uncertain economy. The company witnessed unit growth of 9.1%, 10.9%, 9% and 21% in 2012, 2013, 2014 and 2015, respectively. Its aggressive unit expansion strategy is expected to continue to accelerate same-store sales, going forward. In order to expand its business domestically, Buffalo Wild Wings is looking for new investment opportunities in fast-growing small restaurant chains. Therefore, in Mar 2013, the company acquired a minority stake in Los Angeles-based pizza chain, PizzaRev. PizzaRev is a fast-casual pizza restaurant, famous for its ‘Craft Your Own’ fast-casual pizza concept. The brand boasts a solid customer base in Los Angeles with strong unit economics and customized pizza offerings. In 2014, Buffalo Wild Wings also made a majority investment in Rusty Taco, Inc. (now known as R Taco) – which owns and operates Rusty Taco restaurants, a fast-casual chain that specializes in “street tacos” served at a modest price. The company has growth plans for both R Taco as well as PizzaRev. Investments like R Taco and PizzaRev are part its strategy to partner with emerging restaurant concepts that have the potential for significant growth. The company intends to grow R Taco and PizzaRev through both company-owned and franchise development in 2016. We believe that these investments will likely help broaden Buffalo Wild Wings’ reach in the U.S. quick-service restaurant industry and tap the fast casual restaurant segment, which is becoming increasingly popular in the country. Meanwhile, there are currently 13 international Buffalo Wild Wings in Mexico, the Philippines, the Kingdom of Saudi Arabia, and the United Arab Emirates and the company is on track to expand its international locations with plans to enter India and Panama in 2016. Innovative Offerings to Aid Sales Ahead: Buffalo Wild Wings remains better positioned than many of its peers on the back of menu innovation, promotional offers, better food presentation and operational efficiency. In fact, in order to offset the impact of rising costs of sales due to price fluctuations in chicken wings, the company adheres to strategies like selling wings by portion, reducing food waste, increasing promotions, and menu additions. The company regularly introduces new products and makes limited time offers to boost traffic. The company is set to launch a new menu soon. On the limited time menu, the company will bring street tacos and Buffalo Mac & Cheese. The Cocktail menu will feature Touchdown Spike made with Dr. Pepper and Apple Pie flavored moonshine. Sauce Lab will have traditional Mexican mole sauce. Being the title sponsor of the Buffalo Wild Wings Citrus Bowl again this year, the company has created the zesty citrus sauce with the flavor of Mountain Dew and will be available in restaurants beginning Dec 13. Meanwhile, the company launched B-Dubs Fast Break, a system-wide lunch program in April to boost lunchtime sales, which is performing well. The program is for guests who do not have enough time during lunch hours. Moreover, with the company’s Stadia restaurant design gaining popularity, the company plans to remodel 70 company-owned restaurants while its franchisees expect to re-model 50 to 60 locations to Stadia in 2016. The design has received great guest feedback and is expected to attract more visitors, thereby improving sales. The design gives the guests a feel of a stadium with an increased number of TV screens and more beers. The company launched the Blazin' Rewards, loyalty program in September, which is being implemented at 50 restaurants in five pilot markets. With differentiated ways to earn points and deliver meaningful rewards, the program is exceeding the company’s expectation of guest registrations. The company continued to roll out B-Dubs TV to more restaurants and expects full implementation in early 2016 with franchises adding the feature throughout 2016. Additionally, under its ‘guest experience business model’ introduced in 2013, the company is installing tablets at all its restaurants to provide exclusive social gaming opportunities, and sports content to customers. In October, the company launched an initial in- restaurant test for mobile payment on guest device via paybdubs.me. In approximately 20 locations, several handheld devices are helping servers to be more efficient in taking orders and payment, thereby improving guest satisfaction.