July 22, 2015 | 1:48 PM by Fahad Khalid | fkhalid@jaguaranalytics.com

Checking Out Buffalo Wild Wings (BWLD)

Small buyers of 400 September 185 calls today for $3.80 when the bid/ask was 3.30 x 3.80. About $150,000 bullish bet with stock currently at $173. Separately, over 300 August 170 puts sold to open on the bid for $6.10 to $7.00 credit; willing buyers below $170. Small signs of bullish order flow ahead of earnings on July 28. This is despite a big downgrade from OTR Global yesterday. But here is an interesting thought from Goldman Sachs issued on July 1:

“We believe BWLD is undervalued versus a 1,700 unit TAM in the US (with additional optionality around smaller footprint units, international and emerging concepts), and favorable wing price risk/reward, manageable comp expectations in 2Q, and the potential for a lunch and technology driven comp acceleration into 2016 provide an attractive entry point to the longer-term story. Wing prices have been stable since 1Q earnings and BWLD recently entered a straddle contract that insulates it from seeing the highs/lows in the market. Wing prices are currently closer to the highs than the lows, implying it would hit the upper limit of the straddle more quickly than the lower limit.”

More importantly, what has changed since that large gap down after Q1 results? Here are a few things to note:

— Launch of B-Dubs® Fast Break, a system-wide lunch program that provides Guests speed and value during the day.

— Launch of World of Sports to Buffalo Wild Wings beginning in June, highlighting fun and unique sports from the U.S. and around the world.

So, the question is: Will we see same store sales accelerate back to +6% after moderate slow down noted in Q1? Lets find out on July 28

BWLD Chart

#BWLD
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