Tuesday, February 12, 2008

BWLD Blow-out Quarter

Well, the title was a little exaggerated to grab attention, but thankfully (and as I expected), BWLD reported a strong quarter that should rejuvenate investor confidence.

The street expected $.31, and BWLD came in at $.34, which was a 4 cent (13%) increase over last year's numbers (when the extra week of last year [yeah, they have funny accounting stuff]) is disregarded).

I'm long BWLD stock in my Ameritrade portfolio, and I was long calls until 3:45 pm. I sold them off because the IV was around 80; the March 25 calls were trading at $2 when the stock was at $23 and change.

After hours (and before the conference call), the stock is up over $26. I probably would have made a little more money if I had held my options, but the IV will drop tomorrow morning and they'll probably stay around flat. The stock isn't too heavily traded after hours, so if the call's contents are good we'll see much more volume (and maybe price movement) tomorrow morning.

I dollar-cost averaged all the way down from the mid-30s to the low 20s; I've been waiting for the stock to get back on track. Missing earnings (barely) last quarter derailed this value-growth play; now that the company has controlled cost, beaten estimates, and reported a great quarter (considering the tough economic environment), it's time for earnings expansion AND p/e expansion (BWLD, before the announcement, traded at a 17 forward p/e, which is below its 20+% growth rate).

I'm hoping for a good call, and a slow, steady return on my investment.

(Earnings press release here)

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