Casual diners Bloomin' Brands, Buffalo Wild Wings rated buy at Goldman

Shares of casual-dining companies Bloomin' Brands Inc. and Buffalo Wild Wings Inc. rose Wednesday. after Goldman Sachs initiated coverage on the sector with buy ratings on both stocks. Cheesecake Factory Inc. shares moved lower, as the broker rated it a sell. Goldman analysts said the casual dining sector ranks in the top half of its discretionary subsectors in the three-year outlook for earnings per-share growth, free cash flow growth and growth in cash return on cash invested. "Compared to other consumer sectors, casual diners have below average operating margins and cash conversion ratios, which means greater financial leverage to a top-line recovery (and a number of metrics show a continued acceleration in underlying trends)," they wrote in a note. Bloomin' Brands' Outback Steakhouse unit is enjoying a positive reception for its lunch offering ahead of an ad campaign, which could add 500 basis points to two-year comparables by the third quarter, said the note. Buffalo Wild Wings stock is looking cheap based on growth trends, it said. Cheesecake Factory has a higher-income customer base and is grappling with supply constraints, which makes it less likely to take part in a recovery, said the note. Bloomin' Brands shares were last up 1.7%, while Buffalo Wild Wings was up 1.8%. Cheesecake Factory shares were down 0.5%.

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