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Should You Buy Buffalo Wild Wings (BWLD) Before Earnings?

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Shares of Buffalo Wild Wings gained over 5.8% during regular trading hours Monday after activist firm Marcato Capital Management announced a new 5.1% stake in the company. Today’s activity comes just before the wing maker announces its second-quarter earnings results on Tuesday.

According to an SEC filing, Richard McGuire’s Marcato Capital has had and plans to continue having discussions with directors and officers of Buffalo Wild Wings.

“These discussions may review options for enhancing shareholder value through various strategic alternatives or operational or management initiatives including, but not limited to, improving returns on invested capital, determining appropriate capital structure and capital allocation methodology, optimizing mix of franchised vs. company-operated units, aligning incentive compensation with disciplined capital allocation practices, and general corporate strategies to enhance unit-level and franchisee profitability,” the filing said.

Marcato will be hoping that its new stake in Buffalo Wild Wings gets off to a hot start with a solid earnings report tomorrow. However, just because this activist firm has snatched up shares doesn’t mean every investor should. The stock was hot for much of 2015, but shares are down over 15% on the year and BWLD needs to turn things around quickly.

Heading into tomorrow’s earnings report, Buffalo Wild Wings has a Zacks Rank #2 (Buy) and a VGM score of “A,” however, predicting an earnings beat is still difficult because the company’s Earnings ESP currently sits at 0%.

Over the past 60 days, we have seen one positive estimate revision and one negative revision for this quarter’s earnings, which further muddles the picture right now. The company is also trying to reverse its trend of underperforming, as Buffalo Wild Wings has missed the Zacks Consensus Estimate by an average of 11.22% over the trailing four quarters.

Buffalo Wild Wings’ strong Zacks Rank is influenced more by analysts’ outlook for the remainder of the year. Over the past 60 days, we have seen four positive estimate revisions for the company’s next quarter and full-year earnings.

Tomorrow’s earnings report may be a bit too much of a gamble for some investors, but we are seeing some positive signs for Buffalo Wild Wings down the line. Regardless of what the company reports for earnings tomorrow, investors will want to keep an eye on any and all guidance that the company provides.

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