Motley Fool Hidden Gems recommendation Buffalo Wild Wings (NASDAQ:BWLD) is reporting earnings tonight, and many a Fool is watching with bated breath. The company has been a steady performer and an exciting growth story over the last couple of years. Can it keep those nice table manners this time around?

What analysts say:

  • Buy, sell, or waffle? According to Thomson First Call, nine out of 10 analysts following Buffalo Wild Wings agree that the 10th should chill out and join the club. That last one is advocating a "hold," while the other nine say "buy."
  • Revenues. Analysts are looking for a 24% year-over-year improvement in sales, to $59.3 million, on average.
  • Earnings. The average analyst forecast calls for $0.28 of quarterly GAAP profits, up from $0.22 a year ago.

What management says:
"In the second quarter, our focus is on continuing both same-store sales momentum and operational improvements over the prior year," says CEO Sally Smith. Buffalo Wild Wings has heady expansion plans in the works, but it sounds like that will be a secondary goal this quarter, in exchange for a tighter focus on operational improvements.

What management does:
Margins improved last quarter, and the rise was attributed to the popularity of higher-margin boneless wings. Operational efficiency in general seems stable and rather high, but there is still plenty of room for improvement. Funneling more dollars onto the cash flow statement would certainly help the company's expansion plans, so that should be a primary target here -- just like Smith said.

Margins %

11/04

2/05

5/05

8/05

11/05

2/06

Gross

38.3

38

38.4

38.8

38.8

39.3

Operating

6.6

6.5

6.4

6.7

7.1

7.5

Net

4.2

4

4.2

4.4

4.2

4.5
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
 It looks like Buffalo Wild Wings is serious about increasing same-store sales, as evidenced by management's comments and a recently announced advertising deal with ESPN. Talk about hitting your target audience right where it matters.

It will be interesting to see how the updated store count matches the stated strategy. If any significant number of new stores opened during a quarter of increased efficiency, you'd expect most of them to be company-owned rather than franchised. But of the 384 stores reported at last count, only one-third of them were closely held. Granted, efficiency varies little between the store types, but when you're running on tight margins to begin with, every percentage point counts.

This Buffalo is running ahead with healthy organic growth atop aggressive expansion. The trick is to keep the momentum going, and to get the word out in the new markets the chain is entering. I lived across the street from a Buffalo Wild Wings for more than a year, yet never knew it was there until the Fool got me interested in finding out about the company. Sometimes, marketing really is the name of the game.

Competitors:

  • Domino's Pizza (NYSE:DPZ)
  • Papa John's Pizza (NASDAQ:PZZA)
  • Yum! Brands (NYSE:YUM)

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Fool contributor Anders Bylund owns none of the stocks discussed here. The Fool's disclosure rules come in mild, medium, and blazing hot. You can check out Anders' holdings for yourself.