Buffalo Wild Wings (BWLD) topped expectations a couple weeks ago and now has analysts raising estimates. Growth rates are looking strong and a sell of in the spring produced a great buying opportunity.

Company Description

Buffalo Wild Wings owns, operates and franchises the popular sports bar chain bearing the same name. Currently there are almost 700 locations in 44 states.

Convincing Earnings Surprise

On Jul 27 the wing slingers reported quarterly earnings that showed a 12.4% jump in revenue, to nearly $146 million. The improvement came due to the companies aggressive expansion plans, as same-store sales were off a fraction of a percent.

Net income was up more than 31% to $9.2 million, which breaks down to 50 cents per share. Heading into the announcement, the Zacks Consensus Estimate was calling for 42 cents.

Positive Outlook

Buffalo Wild Wings management said same-store sales are up in July and reaffirmed their goal of 20% net earnings growth and more than 13% unit growth. Currently the company is on pace to meet both of those targets, despite the worries analysts had stemming from the previous quarterly report.

Analysts Like it

Following the earnings surprise analysts quickly raised full-year estimates. The Zacks Consensus Estimate for 2010 is up 12 cents, to $2.07 on 15 upward revisions.

Next year’s projections are up 9 cents on average, to $2.44. Given the $1.69 Buffalo Wild Wings brought in last year the annual growth rates are standing at 22% this year and another 18% in 2011.

While the estimate revisions have brought the P/E down slightly, to under 20 times forward estimates, the value is in the growth. The PEG ratio is currently 0.9 times.

Industry Comparison

While restaurants are not in favor with investors, Buffalo Wild Wings is the top rated amongst the 45 in the industry. The return on equity is currently 16.2%, about 180 bps better than its peers. The net profit margin is 6.1%, trumping the industry average of 3.4%.

The Chart

Estimates and price action for BWLD are showing a consistent trend of year-over-year growth. The sharp decline in April looks to have produced a great buying opportunity now that earnings estimates are back on the rise.

Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service

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