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Feltl Upgrades Diversified Restaurant Holdings Following 'Much Better' Than Expected Q1

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In a report published Friday, Feltl and Company analyst Mark Smith upgraded shares of Diversified Restaurant Holdings, Inc (NASDAQ: BAGR) to Strong Buy from Buy with an unchanged $6.50 price target following the company's "much better" than expected first quarter results.

Smith noted that the company's first quarter same-store sales increase of 8.0 percent over a 1.2 percent comp last year was higher than the 8.9 percent he projected. Sales increased 29.4 percent from the same quarter a year ago to $39.4 million and also exceeded his estimates of $37.9 million. The company earned $0.01 per share in the quarter, which was higher than the break-even Smith previously estimated.

By segment, same-store sales increased 11.2 percent at Bagger Dave's restaurants and increased 7.6 percent at Buffalo Wild Wings (NASDAQ: BWLD) (the company operates Buffalo Wild Wings franchised restaurants in Indiana, Illinois, Michigan and Florida), marking the 17th consecutive quarter of positive same-store sales growth.

Smith said the company's restaurant-level margin of 19.0 percent was higher than his 17.5 percent estimate. He noted that the restaurant margin figure is more impressive when considering the macro-economic headwinds including labor inflation and food cost pressures in beef and chicken wings.

Management maintained its 2015 sales guidance of $148 million to $158 million, maintained its restaurant-level EBITDA guidance of $26.0 million to $28.5 million and adjusted EBITDA guidance of $16.0 million to $17.0 million. According to the analyst, the company's guidance may ultimately prove conservative although he did caution it is still early in the year and many things can change.

Latest Ratings for BAGR

DateFirmActionFromTo
May 2015Feltl & Co.UpgradesBuyStrong Buy
May 2013Feltl & Co.Initiates Coverage onBuy

View More Analyst Ratings for BAGR
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Posted-In: Bagger Dave's Buffalo Wild Wings Diversified Restaurant Holdings Feltl And Company Food InflationAnalyst Color Upgrades Analyst Ratings

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