Buffalo Wild Wings Stock

Source: Buffalo Wild Wings.

Thanks in part to the broader market's recent pullback, Buffalo Wild Wings' (NASDAQ:BWLD) stock still hasn't rebounded from last quarter's post-earnings plunge. But that shouldn't make investors in the wings, beer, and sports-centric restaurant chain any less excited for its fourth-quarter 2015 report later this week.

For perspective, Buffalo Wild Wings doesn't typically provide detailed financial guidance for revenue and earnings each quarter. But management did confirm three months ago that same-store sales rose an underwhelming 2.8% at company-owned locations, and 0.8% at franchised restaurants through the first four weeks of Q4. After combining that performance with rising labor costs and slightly higher-than-expected prices for traditional chicken wings (averaging $1.80 per pound over the same period), Buffalo Wild Wings ultimately revised its full-year 2015 guidance for net earnings to increase in the single-digit percentage range over 2014, down from previous guidance for growth of 13%. Analysts, on average, expect Buffalo Wild Wings' full-year 2015 earnings to climb just 3.6% to $5.13 per share.

It could be worse
Though wing prices started the quarter higher than Buffalo Wild Wings anticipated, the company is also facing much friendlier year-over-year comparisons, given the sky-high $1.90 per pound it paid for traditional wings in last year's fourth quarter. For that, Buffalo Wild Wings can partly thank modified pricing agreements that went into effect last April, with the aim of narrowing the cost per pound it pays when wings are at historically high and low market prices. In any case, if the market price for wings did enjoy an overdue decline by the end of the quarter, the money Buffalo Wild Wings saves should fall right to its bottom line. 

In addition, note by now that Buffalo Wild Wings should have completed the final piece of a three-stage price increase initiated last year to help offset these and other rising costs. Specifically, the company initiated a modest menu price increase on alcohol this past August, increased Wing Tuesday and Boneless Thursday pricing at select company-owned restaurants in September, and then capped it off with broader menu price increases in early November. If Buffalo Wild Wings' past methodical price increases are any indication, the chain's loyal diners should hardly notice the end result, as it amounts to a modest 4.2% cumulative impact over last year's fourth quarter.

On one-time charges, labor costs
Meanwhile, keep a close eye on Buffalo Wild Wings' progress integrating its previous $160 million acquisition of 41 franchised locations. When Buffalo Wild Wings initially revealed the acquisition in the second quarter, it told investors to expect the company to incur around a 5% impact to net earnings for the year, or roughly $0.25 per share, related to a combination of ownership transition costs and adding almost 2,600 new employees to the company-owned fold. Last quarter, the purchase had a roughly $0.13-per-share negative impact to earnings, so don't be surprised if we see the remainder of these charges recognized in Q4.

On a related note, Buffalo Wild Wings has also stated that the cost of labor as a percentage of overall sales should be right around 31% this quarter-down from 31.1% in the same year-ago period, and 32.2% in Q3 -- including some labor efficiencies related to the franchise acquisition. 

Looking forward
But if last year's fourth-quarter report is any indication, arguably more important in determining the market's reaction will be Buffalo Wild Wings' forward guidance, which currently calls for 2016 net earnings growth to "exceed 20%." Sure enough, analysts' consensus estimates predict that Buffalo Wild Wings' 2016 earnings will grow more than 26% to $6.48 per share -- that is, assuming it meets expectations for 2015. 

To get there, management will rely on a combination of improved performance from those newly acquired franchises -- where revenue growth was negative last quarter -- as well as the continued build-out of new Buffalo Wild Wings locations (95 total expected in 2016, including 50 company-owned, 30 U.S. franchises, and 15 international franchises), growth in emerging concepts, including R Taco and PizzaRev, and various other initiatives focused on operational efficiency.

In the end, it remains to be seen whether Buffalo Wild Wings will live up to these lofty expectations, and shares don't look particularly cheap, trading around 31.8 times trailing 12-month earnings. But if all the pieces fall into place and Buffalo Wild Wings can indeed resume its past levels of healthy growth, I suspect that premium could prove to be well deserved.

Steve Symington owns shares of Buffalo Wild Wings. The Motley Fool owns shares of and recommends Buffalo Wild Wings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.