Validea’s pick of the week provides a detailed report on a company that scores well in the stock-screening service’s model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
Founded in 1982, Minnesota-based restaurant/bar chain Buffalo Wild Wings has over 1,000 locations across all 50 states in the United States, as well as in Canada and Mexico. It has a market cap of $2.7-billion (U.S.)
The company gets strong interest from the Martin Zweig-based strategy, thanks in part to its strong, accelerating growth. EPS grew 71 per cent last quarter, up from average of 41 per cent in the previous three quarters, up from 22 per cent long term (using an average of the 3-, 4- and 5-year EPS growth rates)
The Zweig model also likes that sales growth has been accelerating (21 per cent last quarter vs. 12 per cent previous quarter) and that sales growth -- not one-time factors -- has driven earnings growth over the long term (25-per-cent long term sales growth rate, using an average of the 3-, 4- and 5-year sales growth rates). Sales growth is also 5 times industry average over long term.
Buffalo Wild Wings has debt/equity ratio of just 7 per cent, far below industry average of 158 per cent, which the Peter Lynch- and Zweig-based models love.
It has a 19-per-cent return on equity vs. 11 per cent for the restaurant industry. Its 12-month relative strength of 82 shows good momentum and it has increased EPS each year of the past decade, which the Warren Buffett-based model likes. Its 19-per-cent return on retained earnings (those not paid out as dividends) over the past decade also impresses the Buffett model
John Reese is long BWLD.
Click here for a complete breakdown of Validea's investing guru report.
Read other research reports here.
Follow us on Twitter: