Buffalo Wild Wings, Panera Show Feast or Famine for U.S. Dining Stocks

Henry Truc  |

The National Chicken Council estimated that over 1.25 billion chicken wings were consumed on Super Bowl Sunday, equating to more than 100 million pounds of poultry limbs inhaled by viewers. More astounding is that the organization estimates that Americans will eat about 25 billion wings in 2012. The love affair between Americans and tender wings has been steadily growing through the decades, and is as strong as ever.

The run on chicken wings has been quite the boon for Buffalo Wild Wings (BWLD) in recent years. The company announced that earnings and revenue for the fourth quarter again smoked Wall Street estimates. Shares of BWW soared higher by almost 16 percent today on the news, and is up over a scorching 70 percent over the last year.

Buffalo Wild Wings posted record revenue for the quarter, jumping 34.5 percent to $220.5 million, and beating the $210.5 million projected by analysts. Net income grew at about the same rate to $0.73 per share, up from the $0.55 per share a year ago, and easily beating analyst expectations of $0.67 per share. Same-store-sales also increased by about 9 percent, representing the company's growing popularity in its existing chain locations.

Analysts had expected higher prices of chicken wings to clip Wings' growth for the quarter. "It just didn't happen," said Larry Miller, an analyst with RBC Capital Markets. "Business was strong in the fourth quarter and got even stronger in the first quarter. They reaffirmed guidance, and that's all it took."

Hottest Restaurant Stocks

Buffalo Wild Wings has been one of the hottest names in the restaurants group, even threatening to dethrone Chipotle Mexican Grill (CMG) as the darling of the industry on Wall Street. Meanwhile, Panera Bread (PNRA), a company that was looked at in the same light as BWW, saw shares plummet by as much as 7.3 percent today as revenue for Q4 missed estimates. The company's profit did match Wall Street's expectations, but weaker top line growth could be signs that the company's growth rate may have been just too hot to handle.

Casual dining stocks have enjoyed a nice rebound as American consumers are showing more willingness to eat out in recent months. Yet, as the smaller, more niched-businesses--like Chipotle, Buffalo Wild Wings and Panera--have shown, there's a high level of risk-reward trying to play to trendy consumer appetites.

But even other players like Brinker Intl. (EAT), Darden Restaurants (DRI), and DinEquity (DIN), which operate their own portfolios of restaurant chains are at the mercy of the volatile taste buds and spending habits of diners. But if consistency is the flavor of choice, giant fast food chains like McDonald's (MCD) and Yum Brands (YUM) could be the place to look as they are less subject to the whims of American consumers because of their broad international exposure.

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