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Buffalo Wild Wings (BWLD) Q3 Earnings: What's in Store?
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Buffalo Wild Wings Inc. is scheduled to report third-quarter 2016 results on Oct 26, after market close.
Last quarter, Buffalo Wild Wings posted a positive earnings surprise of 0.79%. However, before that, the company lagged earnings estimates in the three trailing quarters, bringing the average surprise in last four quarters to a negative 8.25%.
Let’s see how things are shaping up for this announcement.
Buffalo Wild Wings has been witnessing positive comps over the past several quarters driven by its strong market position and new menu launches. However, the company’s comps declined in the past two quarters owing to lower traffic trends.
We believe that the menu price increases made by the company along with a soft consumer spending environment in the U.S. restaurant space might affect the quarter’s traffic trends further, thereby putting comps under pressure.
Nonetheless, Buffalo Wild Wings’ efforts to revive comps growth via various digital initiatives, the remodeling of existing locations, promotional offerings, better food presentation and operational efficiency should somewhat boost quarterly results. Also, the company’s association with major sporting events and partnership with popular beverage chains bode well and should drive performance in the to-be-reported quarter.
However, fluctuation in the price of chicken – a key ingredient for the company – might hurt the quarter’s profitability. Also, costs related to company’s sales boosting initiatives and higher labor costs due to the competitive labor market are estimated to continue denting profits in the third quarter.
Earnings Whispers
Our proven model does not conclusively show that Buffalo Wild Wings is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as elaborated below.
Zacks ESP: Buffalo Wild Wings has an Earnings ESP of -2.40%. This is because the Most Accurate estimate stands at $1.22, whereas the Zacks Consensus Estimate is pegged higher at $1.25.
Zacks Rank: Buffalo Wild Wings has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Fogo de Chao, Inc. has an Earnings ESP of +13.33% and a Zacks Rank #3.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #3.
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Buffalo Wild Wings (BWLD) Q3 Earnings: What's in Store?
Buffalo Wild Wings Inc. is scheduled to report third-quarter 2016 results on Oct 26, after market close.
Last quarter, Buffalo Wild Wings posted a positive earnings surprise of 0.79%. However, before that, the company lagged earnings estimates in the three trailing quarters, bringing the average surprise in last four quarters to a negative 8.25%.
Let’s see how things are shaping up for this announcement.
BUFFALO WLD WNG Price and EPS Surprise
BUFFALO WLD WNG Price and EPS Surprise | BUFFALO WLD WNG Quote
Factors Likely to Influence this Quarter
Buffalo Wild Wings has been witnessing positive comps over the past several quarters driven by its strong market position and new menu launches. However, the company’s comps declined in the past two quarters owing to lower traffic trends.
We believe that the menu price increases made by the company along with a soft consumer spending environment in the U.S. restaurant space might affect the quarter’s traffic trends further, thereby putting comps under pressure.
Nonetheless, Buffalo Wild Wings’ efforts to revive comps growth via various digital initiatives, the remodeling of existing locations, promotional offerings, better food presentation and operational efficiency should somewhat boost quarterly results. Also, the company’s association with major sporting events and partnership with popular beverage chains bode well and should drive performance in the to-be-reported quarter.
However, fluctuation in the price of chicken – a key ingredient for the company – might hurt the quarter’s profitability. Also, costs related to company’s sales boosting initiatives and higher labor costs due to the competitive labor market are estimated to continue denting profits in the third quarter.
Earnings Whispers
Our proven model does not conclusively show that Buffalo Wild Wings is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as elaborated below.
Zacks ESP: Buffalo Wild Wings has an Earnings ESP of -2.40%. This is because the Most Accurate estimate stands at $1.22, whereas the Zacks Consensus Estimate is pegged higher at $1.25.
Zacks Rank: Buffalo Wild Wings has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
The Wendy's Company (WEN - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fogo de Chao, Inc. has an Earnings ESP of +13.33% and a Zacks Rank #3.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>