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Buffalo Wild Wings: Be Cautious With Your Expectations

Stocks in this article: BWLD MCD PEP

NEW YORK (F.A.S.T. Graphs) -- Buffalo Wild Wings (BWLD - Get Report), colloquially known as "B-dubs" was founded three decades ago with a single location. Today, Buffalo Wild Wings has 960 restaurants,  538 of which are franchised and the rest company-owned.

I could elaborate, but Buffalo Wild Wings' investor Web site does an excellent job of providing an entertaining synopsis:

"It all started in 1982 with one restaurant in Columbus, Ohio. Since then we've grown to have a store in almost every state in the U.S. (sorry, Rhode Island) and continue to open B-Dubs around the world (you're welcome, Earth)."

True to the company's core values of "Beer. Wings. Sports," roughly 40% of the business is derived from wings and 22% is a result of alcohol sales. (I couldn't find data on the amount that comes from consistently offering sports viewing options) The wings portion of the business is especially impressive given fact that McDonald's (MCD) , a much larger restaurant operator, has been unsuccessful in developing the chicken wing market.

In 2012 Buffalo Wild Wings had system-wide sales of $2.5 billion and is working to reach 1,700 locations in the intermediate term. Of late Buffalo Wild Wings has been nothing if not a growth story. Over the past five years unit locations have grown by 13% a year, revenue has averaged 25% yearly growth and net earnings have increased at a per annum rate of 24%. Next year the company is targeting a goal of 20% net earnings growth.

Aiding in this fast growing stage is Buffalo Wild Wings' recent partnership with PepsiCo (PEP).This creates the opportunity to add new snack food options, much like PepsiCo's partnership with Taco Bell to create the Doritos Tacos. Additionally, the deal could also allow Buffalo Wild Wings to tap into PepsiCo's major sporting organization connections with the National Football League and Major League Baseball.

It shouldn't be difficult to see that Buffalo Wild Wings has been an exceptionally strong company of late and continues to have increased growing opportunities. For instance, by utilizing the Fundamentals Analyzer Software Tool of F.A.S.T. Graphs below we can see that Buffalo Wild Wings was able to increase operating earnings (orange line) by almost 25% a year since 2003. Although the company does not pay a dividend, it's clear that the company has been able to put its earnings to good use.

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