Jefferies & Company Identifies Retail Names Offering Growth

Jefferies & Company’s analysis of consumer discretionary companies finds that only 12 are “guiding to 10%+ unit growth in 2010 - and of those, just five are delivering positive SSS including Buffalo Wild Wings (NASDAQ: BWLD), Citi Trends (NASDAQ: CTRN), Ulta Salon, Cosmetics & Fragrance (NASDAQ: ULTA), Chipotle Mexican Grill (NYSE: CMG) and Lululemon Athletica (NASDAQ: LULU).”

Analysts further emphasized the importance of these findings by noting, “The unit growth scarcity is even more striking when considering that more than 30 consumer discretionary companies delivered 10%+ unit growth as recently as 2008.”

In weighing various statistics, analysts determined that investors are willing to pay a higher premium for unit growth compared to SSS. Specifically, they said, “Our research indicates that forward P/E and EV/EBITDA multiples have a stronger correlation with unit growth rates than with SSS.”

Analysts maintain a Buy rating for Buffalo Wild Wings and an Underperform rating for Chipotle. Additionally, the analysts increased the price targets for both BWLD and CMG, from $52 to $55 and $85 to $100, respectively.