Market Overview

Buffalo Wild Wings Earnings Preview: Double-Digit EPS Growth Expected

Buffalo Wild Wings (NASDAQ: BWLD) is scheduled to report its second-quarter 2011 results Tuesday, July 26, after the closing bell. The question for investors is whether the quick-casual restaurateur can top consensus earnings estimates for a sixth straight quarter.

Analysts are looking for Buffalo Wild Wings to report per-share earnings of $0.60, which is a 16.7% rise from the same period of last year. That EPS estimate was $0.59 just 60 days ago. The consensus forecast also calls for the company to post revenues of $176.7 million, an increase of 21.3% from a year ago.

As noted above, analysts have underestimated Buffalo Wild Wings earnings in recent quarters; the beat has been by as much as eight cents per share. Also, analysts so far are looking for similar year-over-year growth of earnings and revenue in the current quarter.

The Company

Minneapolis-based Buffalo Wild Wings owns, operates and franchises more than 750 Buffalo Wild Wings Grill & Bar restaurants in about 45 states. The menu offers more than a dozen unique dipping sauces to accompany with the spicy wings, as well as other items such as chicken tenders and legs. The eateries also offer appetizers, burgers, tacos, salads and desserts, along with beer, wine and other beverages. The company was founded in 1982.

During the three months that ended in June, the company opened a location in Oshawa, Ontario, its first in Canada. It also entered into a service agreement with Buzztime, an interactive digital entertainment network.

Performance

The company has a return on equity of 16.4% and a long-term earnings per share growth forecast of 21.3%. The company boosted its gross margin by 3.1 percentage points in the previous quarter. The consensus recommendation is to buy BWLD; four of 13 analysts rate it a Strong Buy. Their mean price target (or where analysts expect the share price to go) is $70.78 per share.

At $67.32, the share price has pulled back a bit from the recent 52-week high of $69.52, but still is 53.5% higher than at the beginning of the year. That price also is above the 50-day and 200-day moving averages. Year to date, the stock has outperformed the restaurant industry average, as well as the competitors such as BJ's Restaurants (NASDAQ: BJRI), California Pizza Kitchen (NASDAQ: CPKI) and Cheesecake Factory (NASDAQ: CAKE).

Action Items:

Bullish: Traders interested in exchange traded funds invested in Buffalo Wild Wings might want to consider the following trades:

  • iShares S&P SmallCap 600 Index Fund (NYSE: IJR): up 29.5% in the past year
  • iShares Russell 2000 Index Fund (NYSE: IWM): up 29.4% in the past year
  • iShares S&P SmallCap 600 Growth Index (NYSE: IJT): up 34.6% in the past year
  • iShares Russell 2000 Growth Index Fund (NYSE: IWO): up 35.9% in the past year

Bearish: Traders looking for a contrarian option might want to consider these alternative positions:

  • ProShares UltraShort SmallCap600 (NYSE: SDD): up 104.6% in the past year
  • ProShares UltraShort Russell2000 (NYSE: TWM): up 101.1% in the past year
  • Direxion Daily Small Cap Bear 3X Shares (NYSE: TZA): up 107.2% in the past year

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Posted-In: BJ’s Restaurants Buffalo Wild WingsEarnings Long Ideas Short Ideas Previews Trading Ideas ETFs

 

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