Buffalo Wild Wings Lays an Egg

So how do you weigh a growing company in revenue and profits against some strong headwinds such as rising commodities prices that make up your largest product sold?  Welcome to the dilemma of owning Buffalo Wild Wings.

We own shares of BWLD in the DWCM Fund as well as holding positions in our client's accounts.  Although positions are usually small this is a good example of holding some risk which could result in some outsized rewards.

The issue at hand is that food prices are going up which will likely cause pressure of BWLD profits.  The feed inputs that go into growing chickens are on the rise this year due to the drought conditions in the US as well as a decrease in overall chicken supplies.

However, the management team at BWLD has weathered through this storm before.They have done so with the ability to pass on enough of the price increases onto it's customers without hurting sales.  In addition BWLD has continued to expand it's operations with new store openings and solid comps at exiting restaurants.

This Barron's piece gives a bearish look at the stock.  At DWCM we still believe in the growth story and that management will be able to manage through the headwinds.  However this is a play for the risky part of one's portfolio.