Friday’s Top Upgrades (and Downgrades): Quiksilver, Inc. (ZQK), Buffalo Wild Wings (BWLD)

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That’s the good news. The bad news is that they probably shouldn’t want to. HT, you see, just finished reporting its first-quarter earnings results yesterday, and the news wasn’t great. Sales rose only 4% in comparison to last year’s fiscal first quarter. Profits, at $0.46 per share, fell more than a dime short of the $0.59 analysts were expecting.

These kinds of numbers simply aren’t good enough to support the 22 times earnings valuation HT shares enjoyed. Fact is, analysts’ projections of 12% long-term profits growth probably wouldn’t be enough to support the valuation either, not with HT (like everyone else in today’s column, it seems) producing such weak cash profits (just $7.4 million on a $1.9 billion market cap) as it does.

Long story short, there’s more than just an earnings miss, or multiple analyst downgrades (UBS, BB&T, and BMO have all downgraded so far) behind HT’s 9% plunge in share price today. The stock was overvalued to begin with, and doomed to fall.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Buffalo Wild Wings. The Motley Fool owns shares of Buffalo Wild Wings.

The article Friday’s Top Upgrades (and Downgrades) originally appeared on Fool.com and is written by Rich Smith.

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