Buffalo Wild Wings (BWLD) Q1 Earnings: What's In The Cards?

Buffalo Wild Wings Inc. (NASDAQ:BWLD) is scheduled to report first-quarter 2017 results on Apr 26, after the market closes.

Last quarter, Buffalo Wild Wings posted an earnings miss of 29.27%. Moreover, the trailing four-quarter average earnings surprise stands at a negative 7.55%.

Buffalo Wild Wings, Inc. Price and EPS Surprise

Let’s see how things are shaping up for this announcement.

Factors Likely to Influence Q1 Results

Buffalo Wild Wings had 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 four 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 promotional offerings, the remodeling of existing locations, better food presentation along with various digital initiatives including the revamp of its mobile app should somewhat boost quarterly results. In fact, the company’s Oct launch of a new burger platform had increased burger sales by 25% till December, and the trend is expected to have continued in the first quarter as well.

Meanwhile, increased focus on better staffing in the take-out area and improving operational execution is likely to further take-out sales, a growing segment of the company’s overall revenue stream.

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 like unit expansion and higher labor costs due to the competitive labor market are estimated to continue denting profits in the first 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 -0.60%. This is because the Most Accurate estimate is $1.67, while the Zacks Consensus Estimate is pegged higher at $1.68. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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.

Note that 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:

Restaurant Brands International, Inc. (NYSE:QSR) has an Earnings ESP of +5.71% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

McDonald’s Corporation (NYSE:MCD) has an Earnings ESP of +2.27% and a Zacks Rank #3.

Panera Bread Company (NASDAQ:PNRA) has an Earnings ESP of +1.09% and a Zacks Rank #3.

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