Buffalo Wild Wings (BWLD) Q4 Earnings: What's in the Cards?

Buffalo Wild Wings Inc.BWLD is scheduled to report fourth-quarter and full-year 2016 results on Feb 7, after the market closes .

Last quarter, Buffalo Wild Wings posted in-line earnings. However, before that, the company lagged earnings estimates in two of the three trailing quarters, bringing the average surprise in last four quarters to a negative 2.78%.

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

Buffalo Wild Wings, Inc. Price and EPS Surprise

Buffalo Wild Wings, Inc. Price and EPS Surprise | Buffalo Wild Wings, Inc. Quote

Factors Likely to Influence Q4 Results

Buffalo Wild Wings has been witnessing positive comps over the past several quarters driven by its strong market position and new menu launches. However, the company's comps declined in the past three quarters owing to lower traffic trends.

We believe that the menu price increases made by the company along with a soft consumer spending environment in the U.S. restaurant space might continue to affect traffic trends further, thereby putting the quarter's comps under pressure.

Nonetheless, Buffalo Wild Wings' efforts to revive comps growth via various digital initiatives, the remodeling of existing locations, promotional offerings, focus on delivery services better food presentation and operational efficiency should somewhat boost quarterly results. Meanwhile, increased emphasis on better staffing in the take-out area and improving operational execution is likely to further take-out sales, a growing segment of the company's overall revenue stream.

However, the company expects traditional chicken wings prices to be significantly higher than estimated in fourth-quarter 2016 due to high demand and supply disruption, which is likely to dampen the quarter's profits. Additionally, costs related to company's sales boosting initiatives like unit expansion and higher labor costs owing to the competitive labor market are estimated to continue denting profits in the fourth quarter.

Earnings Whispers

Our proven model does not conclusively show that Buffalo Wild Wings is likely to beat the Zacks Consensus Estimate this quarter. This 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. That is not the case here, as elaborated below.

Zacks ESP: Buffalo Wild Wings has an Earnings ESP of -5.51%. This is because the Most Accurate estimate stands at $1.20, whereas the Zacks Consensus Estimate is pegged higher at $1.27. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Buffalo Wild Wings has a Zacks Rank #3 which increases the predictive power of ESP. However, the company's negative ESP makes surprise prediction difficult.

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

Stocks to Consider

Here are some companies in the broader Retail-Wholesale sector to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Carrols Restaurant Group, Inc. TAST has an Earnings ESP of +16.67% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

YUM! Brands, Inc. YUM has an Earnings ESP of +2.82% and a Zacks Rank #3.

Burlington Stores, Inc. BURL has an Earnings ESP of +1.76% and a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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