It has been about a month since the last earnings report for Buffalo Wild Wings, Inc. . Shares have lost about 2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Buffalo Wild Wings Q4 Earnings, Revenues Lag Estimates
Buffalo Wild Wings reported lower-than-expected fourth-quarter 2016 results. The dismal performance was due to the prevailing challenging restaurant environment.
Quarter Highlights
Adjusted earnings of $0.87 per share plunged 34.1% year over year and also came below the Zacks Consensus Estimate of $1.23 by 29.3%.
Total revenue increased a mere 0.8% from the year-ago quarter to $494.2 million on the back of higher restaurant sales, partially offset by lower franchise royalties and fees. However, revenues missed the consensus mark of $515 million by over 4%.
Performance in Detail
During the quarter, company-owned restaurant sales inched up 0.9% year over year to $470.5 million. The upside was driven by the opening of 31 additional Buffalo Wild Wings outlets, partially offset by lower comps growth.
Company-owned comps dipped 4% against a comps decline of 1.8% in the previous quarter. In the year-ago quarter, company-owned comps grew 1.9%.
Franchise royalties and fees decreased 0.4% year over year to $23.7 million, owing to lower comps growth. Comps declined 3.9%, which compared unfavorably with comps decline of 1.6% in the last quarter. Conversely, the company had registered comps growth of 0.1% in the year-ago quarter.
Buffalo Wild Wings' cost of sales, as a percentage of restaurant sales, increased 160 basis points (bps) to 31.1%, due to a 9.9% year-over-year increase in traditional wing pricing. The company’s cost of labor, as a percentage of restaurant sales, also increased 90 bps to 31.8%.
Restaurant operating expenses, as a percentage of restaurant sales, were 15.7%. This reflects a 30 bps increase from the prior-year quarter owing to rise in insurance, repairs and maintenance costs.
A Peek into the First Quarter of 2017
Menu price increases and adjustments made in the last 12 months are expected to add 0.8% to the pricing in the first quarter. The company expects to open three company-owned Buffalo Wild Wings restaurants in the quarter, with two of them already opened. Notably, the company had opened seven new company-owned Buffalo Wild Wings locations in first quarter of 2016.
Meanwhile, cost for traditional chicken wings for the first two months of first quarter remains elevated and is averaging $2.02 per pound. The average cost in first-quarter 2016 was $1.97 per pound.
2017 View
For 2017, the company expects earnings per share to be in the range of $5.60 to $6.00. Meanwhile, comps are anticipated to grow in the range of 1–2%.
During 2017, the company also anticipates to open approximately 15 company-owned and Buffalo Wild Wings restaurants in the U.S. along with 15 franchised Buffalo Wild Wings locations in the U.S., 20 franchised Buffalo Wild Wing locations internationally as well as two company-owned and 12 to 15 franchised R Taco restaurants.
Further, Buffalo Wild Wings expects restaurant-level margin improvement in the range of 10 to 30 bps. However, traditional chicken wing prices are expected to rise in the band of 3.5% to 4.5%. In the meantime, it expects to incur capital expenditure of approximately $100 million during the year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Buffalo Wild Wings' stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.
Image: Bigstock
Why Is Buffalo Wild Wings (BWLD) Down 2% Since Last Earnings?
It has been about a month since the last earnings report for Buffalo Wild Wings, Inc. . Shares have lost about 2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Buffalo Wild Wings Q4 Earnings, Revenues Lag Estimates
Buffalo Wild Wings reported lower-than-expected fourth-quarter 2016 results. The dismal performance was due to the prevailing challenging restaurant environment.
Quarter Highlights
Adjusted earnings of $0.87 per share plunged 34.1% year over year and also came below the Zacks Consensus Estimate of $1.23 by 29.3%.
Total revenue increased a mere 0.8% from the year-ago quarter to $494.2 million on the back of higher restaurant sales, partially offset by lower franchise royalties and fees. However, revenues missed the consensus mark of $515 million by over 4%.
Performance in Detail
During the quarter, company-owned restaurant sales inched up 0.9% year over year to $470.5 million. The upside was driven by the opening of 31 additional Buffalo Wild Wings outlets, partially offset by lower comps growth.
Company-owned comps dipped 4% against a comps decline of 1.8% in the previous quarter. In the year-ago quarter, company-owned comps grew 1.9%.
Franchise royalties and fees decreased 0.4% year over year to $23.7 million, owing to lower comps growth. Comps declined 3.9%, which compared unfavorably with comps decline of 1.6% in the last quarter. Conversely, the company had registered comps growth of 0.1% in the year-ago quarter.
Buffalo Wild Wings' cost of sales, as a percentage of restaurant sales, increased 160 basis points (bps) to 31.1%, due to a 9.9% year-over-year increase in traditional wing pricing. The company’s cost of labor, as a percentage of restaurant sales, also increased 90 bps to 31.8%.
Restaurant operating expenses, as a percentage of restaurant sales, were 15.7%. This reflects a 30 bps increase from the prior-year quarter owing to rise in insurance, repairs and maintenance costs.
A Peek into the First Quarter of 2017
Menu price increases and adjustments made in the last 12 months are expected to add 0.8% to the pricing in the first quarter. The company expects to open three company-owned Buffalo Wild Wings restaurants in the quarter, with two of them already opened. Notably, the company had opened seven new company-owned Buffalo Wild Wings locations in first quarter of 2016.
Meanwhile, cost for traditional chicken wings for the first two months of first quarter remains elevated and is averaging $2.02 per pound. The average cost in first-quarter 2016 was $1.97 per pound.
2017 View
For 2017, the company expects earnings per share to be in the range of $5.60 to $6.00. Meanwhile, comps are anticipated to grow in the range of 1–2%.
During 2017, the company also anticipates to open approximately 15 company-owned and Buffalo Wild Wings restaurants in the U.S. along with 15 franchised Buffalo Wild Wings locations in the U.S., 20 franchised Buffalo Wild Wing locations internationally as well as two company-owned and 12 to 15 franchised R Taco restaurants.
Further, Buffalo Wild Wings expects restaurant-level margin improvement in the range of 10 to 30 bps. However, traditional chicken wing prices are expected to rise in the band of 3.5% to 4.5%. In the meantime, it expects to incur capital expenditure of approximately $100 million during the year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Buffalo Wild Wings, Inc. Price and Consensus
Buffalo Wild Wings, Inc. Price and Consensus | Buffalo Wild Wings, Inc. Quote
VGM Scores
At this time, Buffalo Wild Wings' stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.