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What Awaits Buffalo Wild Wings (BWLD) in Q1 Earnings?

Buffalo Wild Wings Inc. BWLD is set to report first-quarter 2016 results on Apr 26, after the market closes.

Last quarter, the company posted a negative earnings surprise of 10.20%. In fact, the company has posted negative earnings surprises in all of the trailing four quarters. Let’s see how things are shaping up for this announcement.

Factors to Consider

Though Buffalo Wild Wings has been witnessing positive comps over the past several quarter fourth-quarter comps growth was sluggish compared to the year-ago period. This trend is expected to continue in first quarter 2016 as well, owing to the lack of sporting events.

In the fourth-quarter conference call, management stated that for the first four weeks of the first quarter, comps at company-owned restaurants inched up 0.3%, while that at franchised locations dipped 1.5%. This compared unfavorably with year-ago comps growth of 12.7% at company-owned restaurants and 12.4% at franchised locations.

Moreover, high chicken and labor costs have been hurting profits at the company over the past few quarters. Labor costs due to stiff competition in the market and the addition of Guest Experience Captains at its restaurants are also expected to hurt profits in to-be reported quarter.

Earnings Whispers

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 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, that is not the case here, as elaborated below.

Zacks ESP: Buffalo Wild Wings has an earnings ESP of -1.13%. This is because the Most Accurate estimate stands at $1.75, while the Zacks Consensus Estimate is pegged slightly higher at $1.77.

Zacks Rank: Buffalo Wild Wings has a Zacks Rank #3, which when combined with the company’s negative ESP, makes a surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the restaurant industry that you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Domino’s Pizza Inc. DPZ, with an Earnings ESP of +2.06% and a Zacks Rank #2.

Bojangles Inc. BOJA, with an Earnings ESP of +5.88% and a Zacks Rank #3.

Panera Bread Co. PNRA, with an Earnings ESP of +1.33% and a Zacks Rank #2.

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PANERA BREAD CO (PNRA): Free Stock Analysis Report
 
DOMINOS PIZZA (DPZ): Free Stock Analysis Report
 
BUFFALO WLD WNG (BWLD): Free Stock Analysis Report
 
BOJANGLES INC (BOJA): Free Stock Analysis Report
 
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