Buffalo Wild Wings (NASDAQ:BWLD) stock is up over 30% since its last sizzling earnings report three months ago. Can the popular beer, wings, and sports chain keep investors hungry for more? At least in the near term, that depends on what B-Dubs says when it announces fourth quarter results on Thursday, Feb. 5th.
According to data from S&P Capital IQ, analysts are modeling 19.7% year-over-year growth in revenue to $408.85 million and roughly flat earnings of $1.11 per share. For the full fiscal year 2014, this means Wall Street wants earnings to come in at $4.99 per share, representing 31.7% growth over 2013. By comparison, last quarter, Buffalo Wild Wings was willing to estimate that full-year 2014 net earnings growth should "exceed 28%."
For investors who truly want to understand the Buffalo Wild Wings business, it helps to dig deeper into what actually drives those results. Here are three things I'll be watching closely going into report on Thursday:
Will 2015 guidance remain intact?
Last quarter, Buffalo Wild Wings management offered preliminary 2015 guidance with net earnings growth at 18%. At the same time, they understandably cautioned that the figure was subject to change depending on a number of factors including planned new restaurant openings, wing prices, labor costs, and same-store sales trends in the beginning of 2015.
For perspective, traditional wing prices were $1.98 per pound as of late October, representing a huge 32% jump from the average price of $1.50 per pound during the third quarter. CFO Mary Twinem also noted those prices were expected to stay high for at least the duration of 2014, potentially extending into early 2015.
In addition, they reminded investors that labor costs are set to increase thanks both to minimum wage increases in several states, as well as the planned fourth quarter completion of its rollout of higher-paid "Guest Experience Captains" at all company-owned locations.
That is also why Buffalo Wild Wings decided to implement a 3% menu price increase at the end of November, so we'll also want to hear how patrons reacted -- if at all -- to the new prices.
How are the new technology initiatives coming along?
It helps that the primary aim of Guest Experience Captains is to improve the dining experience, which should help to bolster same-store sales. But another way management says they're hoping to achieve optimize a meal at Buffalo Wild Wings is through the introduction of new payment and ordering technology in 2015.
Specifically, CEO Sally Smith noted new tabletop tablets would be at 75% of all restaurants by the end of 2014, including "nearly all company-owned locations." Further, she said their "goal is to fully implement tablet ordering in 2015 and to begin the rollout of server handhelds next year as well." Smith also elaborated that they were in talks with several partners regarding how to best introduce mobile payments and would begin testing multiple options in the first half of this year.
Assuming continued progress with the rollouts has been made, investors should also listen for any insight on whether this new technology is bearing financial fruit. Based on early tests, creating a more engaging and efficient dining experience through technology should serve to even further entice hungry patrons to come back for more.
Any hints of future acquisitions?
Finally, I would love to hear not only how the expansion of the new PizzaRev and Rusty Taco concepts are progressing, but also any new details regarding additional restaurant chains the company plans to acquire.
Buffalo Wild Wings just added $3 million to its stake in PizzaRev during the second quarter of last year, then acquired Rusty Taco for an undisclosed sum this past August. However, Sally Smith subsequently said they've "probably looked at 200-plus" restaurant concepts and plan to invest in up to seven more during the next five years.
Over the long-term -- and keeping in mind Buffalo Wild Wings ended last September with 1,051 total locations -- this should help the company achieve its vision statement of becoming a "growth enterprise of restaurant brands, with more than 3,000 restaurants creating the ultimate guest experience worldwide."
In the end, I suppose long-term investors can certainly hang their hats on that ambitious goal, regardless of what Buffalo Wild Wings says on Thursday. But in the meantime, while the scope of each of these questions is relatively narrow, their respective answers should shed plenty of light on the inner workings and plans of Buffalo Wild Wings going forward.
Be sure to check back here on Thursday for our recap of how Buffalo Wild Wings fared.