Will Buffalo Wild Wings (BWLD) Beat Earnings Estimates? - Analyst Blog

Minnesota-based restaurateur, Buffalo Wild Wings Inc. BWLD is set to report its first-quarter 2014 results on Apr 28, 2014, before the opening bell. Last quarter, the company posted an earnings surprise of 3.77%, driven by year-over-year increase in top line and lower cost of sales.

Let's see how things are shaping up for the upcoming announcement.

Factors to Consider This Quarter

Buffalo Wild Wings has consistently posted strong revenues and comps, despite headwinds like inclement weather and poor economy, mainly through menu and technological innovation. In our view, the upcoming quarter will not be any different.

Particularly, the company's deal in December, last year, with beverage giant – PepsiCo can prove to be a major sales driver. The alliance also opens a new marketing channel in which Buffalo Wild Wings gets access to Pepsi's exclusive marketing rights with the National Football League – which will be a top-line driver in the upcoming quarters.

However, we are concerned about the company's mounting expenses amid a bleak macroeconomic environment. Higher labor costs and pre-opening expenses due to the company's aggressive expansion strategy are expected to be a drag on profitability in the upcoming quarter.

Earnings Whisper?

Our proven model does not conclusively show that Buffalo Wild Wings is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for Buffalo Wild Wings is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.35.

Zacks Rank: Buffalo Wild Wings has a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies in the broader consumer discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

The Walt Disney Company DIS, with an Earnings ESP of +1.03% and a Zacks Rank #2 (Buy).

MGM Resorts International MGM, with an Earnings ESP of +20.00% and a Zacks Rank #3.

Wynn Resorts Ltd. WYNN, with an Earnings ESP of +1.90% and a Zacks Rank #2.