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Bear of the Day: Buffalo Wild Wings (BWLD)

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With the Brexit panic in full swing, even companies beyond the financial space are taking a hit. And with pretty much every company tumbling as of late, how do you find the ones that are likely to turnaround when this turmoil passes, and which are unlikely to climb back?

Well, one way to parse through the list is to take a look at companies with weak earnings estimate revisions. These changes in analyst expectations could signal that a company’s problems are more than broad market related, and that more pain could be ahead in the future, no matter what happens with Brexit.

Company to Watch & Recent Performance

A popular company that definitely fits this bill is Buffalo Wild Wings (BWLD). The company missed earnings estimates in its last report, and BWLD is actually on a pretty rough streak when it comes to meeting analyst expectations.

In fact, BWLD has missed earnings estimates in each of the last six quarters, showing that the company has had trouble for a pretty long period of time on this front. And given that the four quarter average miss is at over 11%, you can’t even really argue that BWLD is just barely undershooting estimates either.

BUFFALO WLD WNG Price and EPS Surprise


Still, shares have actually moved a bit higher since the release so some investors have hope for the company in the near term. However, if you take a closer look at how analysts have been changing their opinions on BWLD’s outlook lately, you’ll see that perhaps a more prudent approach is the best route to take when considering BWLD stock.

Earnings Estimate Revisions

This is especially true when you consider the recent trend from covering analysts on BWLD stock. More than a dozen analysts have pushed their estimates lower for BWLD earnings in the past two months for both the current quarter and the current year period.

And if that wasn’t bad enough for BWLD’s outlook, consider that the magnitude of these estimate revisions has also been severe. Over the past two months, the full year estimate for BWLD stock has fallen over six percent while the current quarter estimate has slumped nearly 10% over the same time frame.

No wonder BWLD currently has a Zacks Rank #5 (Strong Sell) and why we are looking for underperformance from this stock over the next few months.

Other Picks

Some investors might think that Brexit brings a great buying opportunity in order to scoop up domestic-focused (or at least companies with low European exposure) companies for a portfolio. And while that might be true for some, you still need to look at the fundamentals and that is why BWLD is still a company to avoid once this panic is over.

Instead of BWLD, a top pick to look at in the restaurant space could be Dave & Busters (PLAY - Free Report) . Not only does this company have a VGM Score of ‘A’, but it also has a Zacks Rank #1 (Strong Buy) as well. And given it has almost an exclusive-focus on the U.S. market, this could definitely be the preferred way for investors to play the restaurant sector in this otherwise turbulent time.

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