MILLBURN, N.J. (Stockpickr) -- Are we all ready for some football? After months of negotiations, the NFL lockout is finally over. The owners have ratified a new collective bargaining agreement. The players' leadership has recommended that its rank and file accept the agreement as well.
Many companies derive a tremendous amount of revenue and earnings from their relationship with the NFL or as a result of selling products related to the sport or during games. These companies may have prematurely factored into future earnings expectations the absence of an NLF season -- or perhaps their sales have been delayed due to the lockout.
With that in mind, let's take a look at
Buffalo Wild Wings
Buffalo Wild Wings
is a casual dining and sports bar restaurant. As you can glean from its name, the company specializes in chicken wings, accompanied by a wide variety of custom dipping sauces. In addition, it has a large menu of burgers, wraps, sandwiches, salads, ribs, beer and specialty drinks.
During football season, fans flock to Buffalo Wild Wings on Sunday and Monday nights to chow down on wings while they watch the game. In fact, the company is so reliant on its football-related business that it launched a Facebook campaign to "Save Our Season," featuring a petition to the NFL owners and players to get back to the fields and offering six free chicken wings to everyone signed the petition.
I have followed Buffalo Wild Wings since it went public, and I own shares. As of the end of 2010, the company has 732 restaurants in 44 states, of which 259 were company-owned and 473 are franchised. Another 95 units are expected to open in 2011. I am expecting mid-teen percentage unit growth and low-20% earnings growth for several years to come. This could be the next great story after
Chipotle Mexican Grill
in the restaurant universe.
Buffalo Wild Wings is slated to report quarterly results after the close today. The company is expecting to earn 60 cents per share, a 20% increase from the prior year's 50 cent actual earnings. Revenue is expected to increase by about 21% year over year to $176.7 million. Not only are these expectations reasonable, given declining chicken wing prices and strong same-store sales, but BWLD could very well deliver a positive surprise.
Buffalo Wild Wings, one of TheStreet Ratings'
, was recently featured in "
is a global brewer which was formed by the merger of Belgium's InBev with Anheuser-Busch, known to many by its featured brand, Budweiser. The company ranks first or second in market share in 44 countries. In the U.S., the company ranks first in market share and controls just under 50% of the market.
Even with its market dominance and $95 billion market capitalization, Anheuser-Busch InBev is expected to grow earnings by 15% in 2011 and 20% in 2012.
The company replaces
as the official sponsor of the NFL for the 2011 season. The partnership with the NFL should add marginal revenue of as much as $1 billion for Anheuser-Busch InBev. Now that the NFL season is likely to get started, the company can begin to ship product to stadiums and build promotional tie-ins with NFL teams.
The stock is currently trading around $59 but can easily trade back to the $64 level where it has peaked twice in the last 10 months.
As of the most recently reported period, Anheuser-Busch InBev is one of the
is the leading publically held pizza delivery company in the U.S. -- and the world, for that matter. Pizza deliveries will soar during NFL games, and there is no company that is better-suited for couch potato football fans to ring up during a game for a delivery of pizza, wings or bread sticks than Domino's.
estimates that on Super Bowl Sunday, Americans will eat more than 30 million slices of pizza. As a result, Papa John's signed on as the official pizza sponsor of the NFL. While I expect Papa John's to have NFL-related promotions and sales, Domino's is far more reliant on the football season for sales. Pizza Hut, owned by
, is another major player in the pizza business, but that company is more suited for eat-in than takeout business. Domino's has continued to reduce its debt load over the past few years.
Just this morning, Domino's released its second-quarter results, which were nothing short of fantastic. The company reported earnings of 40 cents, 21% greater than the prior year's quarter and above consensus analyst estimates for 36 cents. Revenue of $384.9 million outpaced analysts' expectations by $8.1 million and grew 6.2% year over year. While that revenue growth may appear low, it's an accounting allusion. During the period, 26 units were sold to franchisees, converting sales to franchise fees and distorting revenue growth in the process. Domestic same-store sales rose 4.8%, and international same-store sales rose 7.4%. Finally, operating margins rose 100 basis points to 28.8%.
After today's earnings report, the stock has jumped to a new 52-week high of $28.74. Domino's stock price had been hovering between $24 and $26 for about two months, but I believe that was due to the uncertainty of the NFL season. A good start to the season could boost third-quarter earnings.
Domino's showed up on a June list of the
Through its NFL on CBS broadcast,
will cover afternoon games in which an American Football Conference team is on the road. CBS remains the premier primetime broadcast network in the U.S. NFL games are a great lead in to the company's
and Sunday primetime shows.
While CBS pays a large sum to the NFL for the rights to broadcast games, it more than makes up for that in advertising revenue. While the company has yet to report second-quarter results, I am expecting that upfront advertising sales might have been less robust than expected given the uncertainty of the NFL season. Now that the NFL is likely to kick off, upfront sales should begin to pick up.
CBS announced last quarter that it will double its quarterly dividend to 10 cents per share. The paying down of debt and strong cash flow was instrumental in making that decision. While 2011 will be an exceptional year, 2012 will likely see 20% or more earnings growth thanks not only to the NFL on CBS but also to the company's strong lineup of primetime shows, which include the
How I Met Your Mother
Big Bang Theory
CBS' stock has consistently made new highs since the market bottom of 2009. I expect that trend to continue once the NFL is back.
As of the end of June, CBS was one of the
Dick's Sporting Goods
Dick's Sporting Goods
is the largest retailer of sporting goods and apparel, including team apparel, in the country. Fans love to wear team jerseys, shirts and hats both at home in front of the television or when attending a game in person.
With free agency about to open up once again, many players will be switching teams. Remember that Michael Vick's name on the back of an Atlanta Falcons jersey was passé once he came out of prison and signed with the Philadelphia Eagles, and Chad Ochocinco sold many jerseys for the Cincinnati Bengals once he changed his name from Johnson. In addition, new rookie sensations will be taking the field for the first time. During the lockout, orders for team apparel and related items such as footballs and coolers were low due to the uncertainty of the season. Now fans can go about restocking their inventories for the upcoming season.
I have followed and owned Dick's Sporting Goods ever since the company went public. There is no doubt that Dick's Sporting Goods is the preeminent sporting goods and golfing retailer in the country. The company is still expanding its stores from coast to coast. Earnings growth remains in the high teen percentages. The company has bettered analysts' consensus estimates in each of the past four trailing quarters by 8% on average. The stock traded as high as $42.97 so far this year. With the NFL season about to open and back-to-school sales on the horizon, I expect robust sales for DKS and believe that the stock will eclipse it 52-week high.
Dick's Sporting Goods is one of TheStreet Ratings'
-- Written by Scott Rothbort in Millburn, N.J.
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At the time of publication, Rothbort was long BWLD and DKS, although positions can change at any time.
Scott Rothbort has over 25 years of experience in the financial services industry. He is the Founder and President of
, a registered investment advisor specializing in customized separate account management for high net worth individuals. In addition, he is the founder of
, an educational social networking site; and, publisher of
. Rothbort is also a Term Professor of Finance at Seton Hall University's Stillman School of Business, where he teaches courses in finance and economics. He is the Chief Market Strategist for The Stillman School of Business and the co-supervisor of the Center for Securities Trading and Analysis.
Mr. Rothbort is a regular contributor to
TheStreet.com's RealMoney Silver
website and has frequently appeared as a professional guest on
Fox Business Network
and local television. As an expert in the field of derivatives and exchange-traded funds (ETFs), he frequently speaks at industry conferences. He is an ETF advisory board member for the Information Management Network, a global organizer of institutional finance and investment conferences. In addition, he is widely quoted in interviews in the printed press and on the internet.
Mr. Rothbort founded LakeView Asset Management in 2002. Prior to that, since 1991, he worked at Merrill Lynch, where he held a wide variety of senior-level management positions, including Business Director for the Global Equity Derivative Department, Global Director for Equity Swaps Trading and Risk Management, and Director for secured funding and collateral management for the Global Capital Markets Group and Corporate Treasury. Prior to working at Merrill Lynch, within the financial services industry, he worked for County Nat West Securities and Morgan Stanley, where he had international assignments in Tokyo, Hong Kong and London. He began his career working at Price Waterhouse from 1982 to 1984.
Mr. Rothbort received an M.B.A., majoring in Finance and International Business from the Stern School of Business, New York University, in 1992, and a B.Sc. in Economics, majoring in Accounting, from the Wharton School of Business, University of Pennsylvania, in 1982. He is also a graduate of the prestigious Stuyvesant High School in New York City. Mr. Rothbort is married to Layni Horowitz Rothbort, a real estate attorney, and together they have five children.