Next Monday, Buffalo Wild Wings (BWLD +0.00%) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.
Casual-dining restaurant chains have had a tough time navigating the economic environment in recent years, as the recession strained household budgets, and the ensuing recovery has been too mild to make many American feel financially comfortable. Yet even facing industry headwinds, Buffalo Wild Wings has taken steps to differentiate itself from its peers. Let's take an early look at what's been happening with Buffalo Wild Wings over the past quarter and what we're likely to see in its quarterly report.
Stats on Buffalo Wild Wings
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| |
|---|---|
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Analyst EPS Estimate |
$0.99 |
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Change From Year-Ago EPS |
1% |
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Revenue Estimate |
$303.7 million |
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Change From Year-Ago Revenue |
20.9% |
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Earnings Beats in Past 4 Quarters |
1 |
Source: Yahoo! Finance.
Can Buffalo Wild Wings keep investors satisfied this quarter?
Analysts have had mixed views on Buffalo Wild Wings and its earnings prospects recently. They cut their estimates on the just-ended quarter by a nickel per share, but they've boosted their full-year 2013 earnings-per-share estimates by a penny. The stock, however, has posted very strong gains, rising 22% since mid-January.
Casual-dining restaurants have had a challenging few years, as high cost pressures and weak consumer demand has led to poor results. Earlier this month, Ruby Tuesday announced that same-store sales fell 2.8% on profits that got chopped in half, despite its best efforts to boost its marketing presence.
But Buffalo Wild Wings distinguishes itself from its peers by making itself a destination for sports fans. Its deal with CBS to become the "official hangout" of college basketball's March Madness last month only underlined that focus, and it's been so successful in getting customers to go along with that distinction that its CEO noted last quarter that the company's financial results tracked the timing of the college and NFL football seasons.
Buffalo Wild Wings has been so optimistic about its prospects that it plans to keep expanding to nearly double its current size. With a goal of opening more than 100 new locations by the end of 2013, the company's plentiful cash flow and clean balance sheet gives it the capacity to expand without worrying about any immediate adverse financial impact.
In looking at the quarterly report for Buffalo Wild Wings, keep a sharp eye on how much the company has to pay for its chicken wings, which is by far the most important component of its overall cost of sales. With complete exposure to changing chicken-market conditions, the swings in margins can be huge if chicken prices are unexpectedly volatile in any given quarter.
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