This financial report provides an evaluation of Buffalo Wild Wings, Inc. financial performance for the years 2009, 2010 and 2011. It consists of an evaluation of Buffalo Wild Wing’s financial performance, stock performance, and a recommendation as to whether or not Buffalo Wild Wing’s recent financial and stock performance are of sufficient financial strength to warrant increasing your funds holdings. Buffalo Wild Wings, Inc. is an owner, operator and franchiser of restaurants featuring a variety of boldly-flavored, cravable menu items.
Return on assets shows the rate of return (after tax) being returned on a company regardless of financing structure. It is the measure of how efficiently the company is using all stakeholders’ assets to earn returns. The company uses return on assets to view their company over time or against companies in the industry that have similar financing structures. ROA shows how well a company uses what is has to generate earnings. The return on assets of Buffalo Wild Wings, Inc. from 2009-2011 has increased from 11.09% to 11.52%. Return on Assets has increased from 2009-2011. An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. An increasing trend of ROA indicates that the company is becoming more profitable.
A healthy operating margin is required for a company to pay for its fix cost and generate cash. It is an important indicator of efficiency and profitability. After paying operating costs, operating margin measures the portion of revenue left over. If a company has declining operating margins it can point out weaknesses in company growth. The operating margin for Buffalo Wild Wings, Inc has increased from 8.23 to 9.28 from 2009-2011, which indicates profitability.
Current ratios measure a company’s liquidity and its ability to meet its short term debt obligations. This is important because it measures a company’s current assets with its current liabilities to reflect on the ability to pay the upcoming bills. A current ratio less than one indicate the company might have problems meeting short-term financial obligations. If the ratio is too high, the company may not be efficiently using its current assets or short term financing facilities. Buffalo Wild Wings, Inc. has a current ratio above one percent which indicates the company does not have problems meeting short term financial obligations.
Operating margins are important because they measure efficiency. The higher the operating margin, the more profitable a company's core business is. The operating margin for Buffalo Wild Wings, Inc. increased from 2009- 2011. The operating margin in 2009 was 8.20; 2010 9.20 and2011 9.30.
Cash flow is the amount of money which flows in and out of a business and is the ultimate test of financial health. A positive cash flow occurs when a business receives more money than its spending, which enables a business to pay its bills on time. A negative cash flow means a business is receiving less than it’s spending. This is an important ratio for Buffalo Wild Wings, Inc. because the success of its business relies on keeping a positive cash flow. Cash Flow gives investors an idea of the company's ability to turn sales into cash. From 2009-2011, Buffalo Wild Wings, Inc. has shown an increase. In 2009, Buffalo Wild Wings had 18.01 billion total shares outstanding, 18.18 in 2010 and 18.34 in 2011. The book value per share in 2009 was 11.65, in 2010 14.13 and in 2011 17.34.
Buffalo Wild Wings, Inc has been highly successful even during the tough economic times, but higher food costs have caught up to the stock recently. Analysts have remained locked in on Buffalo Wild Wings over the past three months, not changing their earnings estimates by a single penny. Investors have been a bit more optimistic, though, with the shares rising about 4% since early November. The average brokerage recommendation is that Buffalo Wild Wings, Inc is a moderate buy.
Buffalo Wild Wings, Inc. should get a boost from wing price fall. Mutual funds should increase its holdings of the stock because jumbo chicken wing prices have dropped about 25% over the last six weeks, and the firm believes that this decline should be a near-term catalyst for Buffalo Wild Wing's stock. (Agee, 2013) The firm maintains a Buy rating on the shares. It is considered a buy rating because of the company’s strength in revenue growth, growth in earnings per share, increase in net income, and largely solid financial position with reasonable debt levels. Even though the company shows low profit margins, the company’s strengths outweigh this measure. Buffalo wild Wings fourth quarter results demonstrate strong sales growth with even higher profit improvements. The fourth quarter recap shows sales have improved 13.1% to 163.9 million.
In the past three years the company has effectively transferred the wing boom into its topline, increasing revenues by an average of 22.9% per annum. Interestingly, this is significantly higher than the restaurant industry average of 4.4%, and competitors like Darden Restaurants at 4.2%, Brinker International at -13.3%, Ruby Tuesday at -2.4%, and DineEquity at -12.7%. (Sharma, 2012)
Year over year, Buffalo Wild Wings Inc. has been able to grow revenues from $784.5M to $1.0B . Most impressively, the company has been able to reduce the percentage of sales devoted to selling, general and administrative costs from 11.12% to 9.49%. This was a driver that led to a bottom line growth from $50.4M to $57.3M. I do believe Buffalo Wild Wing’s recent financial and stock performances are of sufficient financial strength to warrant increasing your funds holdings.

Bibliography-
Agee, S. (2013, March 7). Buffalo Wild Wings should get boost from wing price fall, says Sterne Agee. Retrieved from Theflyonthewall: finance.yahoo.com/news/buffalo-wild-wings-boost-wing-134509880.html
http://www.gurufocus.com/financials.php?symbol=BWLD