Amid Mixed Q3, Buffalo Wild Wings' Concerns Remain All Too Prevalent

Shares of Buffalo Wild Wings BWLD climbed over 4 percent in Thursday's pre-market hours after its quarterly earnings met the Street view. However, BTIG analysts continue to see too many concerns regarding sales and earnings growth to upgrade their rating. The firm remains at Neutral on the shares.

EPS, SSS And Traffic Reports

Buffalo Wild Wings reported third-quarter EPS of $1.23, slightly below BTIG’s $1.24 estimate and matching consensus. Company-owned same-store sales declined (1.8 percent), below BTIG’s (0.5 percent) forecast. The results included 3.4 percent pricing and a (5.2 percent) drop in traffic.

“We see results at Buffalo Wild Wings as decidedly mixed as comps struggle with continued mid-single digit traffic declines but have shown some signs of improvement with the recent value-oriented Wing Tuesday promotion,” analyst Peter Saleh wrote in a note.

Saleh said the company is being pressured by weaker sales and comps, which are becoming more dependent on generating traffic with initiatives like loyalty.

A Peek Ahead

Looking ahead, the company sees slightly negative comps in the fourth quarter versus the previous outlook of flat comps as the weather impact in the October has tempered the outlook.

Further, the company now expects 2016 EPS to be slightly below the previous guidance of $5.65–$5.85 on moderately weaker comp outlook and higher wing prices.

Given the lowered outlook, Saleh cut his 2016 and 2017 EPS estimates to $5.56 and $6.86 from $5.75 and $7.03, respectively.

“While encouraged by some of the details around achieving the restaurant margin target (20.0 percent by 2018) and the discipline to slow growth, we view the concept’s maturity and need to re-attract customers as major headwinds,” Saleh highlighted.

Shares of Buffalo Wild Wings closed Wednesday’s trading at $135.10. In the pre-market hours Thursday, they gained 4.37 percent to $141.