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We have generally been bearish on Buffalo Wild Wings (BWLD) for some time now for multiple reasons. Be it the inflation risk associated with the cost of wings or an expectation of weaker same store sales, we were generally bearish on the stock…until yesterday.

A similar wings-and-beer chain called Wingstop that has 600 units across 31 states posted strong same-restaurant sales of +12.6% for the second quarter. Over the last two years, BWLD has been highly-correlated to Wingstop in terms of same-restaurant averages. This surprise move to the upside has us backing off the bearish tone we originally had. The current consensus the Street has on BWLD is 6%. We expect that to get blown out of the water as it’d require a complete reversal of the Wingstop correlation, which we don’t see happening. The chart below really gives you a feel for what to expect.

BWLD: Upside Surprise  - BWLD SSS