Tonight, you can grab a plate of boneless Buffalo wings and pull up a chair to an earnings report from Buffalo Wild Wings (NASDAQ:BWLD). The Motley Fool Hidden Gems pick is sure to have something hot on its plate.

What analysts say:

  • Buy, sell, or waffle? Lucky thirteen analysts cover Buffalo Wild Wings. Three of them want to buy the stock, two are trying to sell, and the other eight are holding their respective positions for now. In our Motley Fool CAPS community, it's a four-star stock, based on more than 2,400 user ratings.
  • Revenue. Wall Street expects an average of $77.9 million -- 25% greater than last year's $62.3 million.
  • Earnings. The average analyst thinks that $0.22 per share would hit the spot. That's far beyond last year's $0.14 net profit per share.

What management says:
CEO Sally Smith took the time in the latest earnings report to remind us of the company's internal goals: 15% annual unit growth, 20% or better revenue growth, and 25% net income improvements year over year. The tighter requirements further down the income statement mean that margins should keep climbing, whether by belt-tightening, economies of scale, or innovative marketing.

What management does:
Revenue growth is mostly accelerating, and the whole slate of margins is also marching northward. Together, these two trends are producing some habanero-spicy earnings increases quarter by quarter. All of this growth is fueled by cash flow -- the company doesn't believe in leverage, and it doesn't borrow money to build new stores.

Margins

3/2006

6/2006

9/2006

12/2006

4/2007

Gross

39.3%

39.5%

39.5%

40.1%

40.2%

Operating

8.3%

8.1%

8.3%

9.2%

9.7%

Net

4.5%

4.4%

4.8%

5.9%

6.2%

FCF/Revenue

3.3%

1.9%

1.9%

3.3%

4.1%

Y-O-Y Growth

3/2006

6/2006

9/2006

12/2006

4/2007

Revenue

22.9%

24.6%

27.3%

32.7%

31.7%

Earnings

35.3%

30.7%

39.2%

83.3%

84%

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:
So we have impressive growth despite fiscal restraint; imagine what the Buffalo could do with a few borrowed dollars.

However, you never know when fickle consumers might tire of hot wings in a sports-bar environment, so the measured expansion pace has its rewards. The strategy also gives the company time to build more buzz and expectations around upcoming new locations.

The one form of leverage involved here is the choice to go with about 70% franchise stores and just 30% company-owned locations. Franchise fees make for a low-risk income source with few attached costs, and the store owner is responsible for most of the start-up costs, too. But management seems to want a bigger slice of the income pie served up in those satellite stores, and it's bought a handful of them in the last couple of quarters.

Is it foolhardy (with a small "f") greed that drives such thinking, or a cool-headed balancing of risk versus opportunity? Given the company's recent history, I'm putting my money on the latter -- these Minnesotans tend to be a careful bunch.

Oh, and remember what I said about creative marketing? I got a coupon in my mailbox the other day that promised $100 of free food for me and at least seven of my closest friends, if only we'd hold our fantasy football draft party at our local wing house. The event is sponsored by DirecTV (NYSE:DTV), which pipes draft coverage into the stores, and by CBS (NYSE:CBS), whose fantasy football league programs will be heavily promoted on draft day. And $100 probably won't cover the meal costs for eight or more hungry men (sorry ladies, fantasy sports is one of those alpha-male activities) stuck in a restaurant for hours on end. Clever indeed ...

Buffalo Wild Wings is a Motley Fool Hidden Gems recommendation, and a darn tootin' high-performing one to boot. Read all about it and find other jewels the market missed with a free 30-day trial subscription.

Fool contributor Anders Bylund is a Buffalo Wild Wings shareholder, but holds no other position in any of the companies discussed here. He'll have the roast duck with mango salsa -- no wait, he doesn't have much of an appetite. You can check out Anders' holdings if you like, and Foolish disclosure knows what happened to the weck.