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Buffalo Wild Wings is reporting next week and the CEO, Sally Smith, just appeared on CNBC sounding bullish about Superbowl weekend.  We think 4Q numbers will be strong but we are looking for the forward looking guidance and earnings call commentary.

Keith shorted BWLD in the Hedgeye Virtual Portfolio. We know 4Q is likely going to be a strong quarter.  We are concerned about FY12 and believe estimates need to come down.  This is not a consensus call; zero analysts have sell ratings on this stock.

Buffalo Wild Wings, along with the rest of the space, is trading higher today as jobs data for January indicated that the employment situation continues to improve in the U.S.  The CEO of BWLD also appeared on CNBC this morning and her commentary on Super Bowl Sunday was bullish.  Smith saying that the company “has dealt” with chicken wing prices does not convince us that expectations for FY12 are appropriately aligned. 

Traditional wings make up ~20% of sales for BWLD and wing prices are at extremely elevated levels.  This morning, Smith said that the company has “dealt with” wing prices in the past.  This may be true but our view is that the Street’s expectations have not dealt with the impact of wing prices on BWLD’s earnings very well in the past.  Our view is that FY12 EPS remains high and the growth story is not as secure as the stock’s high multiple suggests.

BWLD: TRADE UPDATE - bwld levels

Howard Penney

Managing Director

Rory Green