First-quarter numbers for Buffalo Wild Wings (NASDAQ:BWLD) stock will be released after the close on Tuesday, April 28. Can shares of the the high-flying sports hangout continue their remarkable run?
If BWLD can beat consensus analyst forecasts, Buffalo Wild Wings stock could fly higher.
And, considering the fact that BWLD has now topped expectations in six of the past seven quarters, I wouldn’t write it off just yet.
But that doesn’t mean earnings will be a slam-dunk for BWLD stock.
What Analysts Want From BWLD
Two major seasonal sports events help drive strong first-quarter revenues year after year: the Super Bowl and March Madness. This year, the Street expects revenue of $452 million from BWLD for the quarter ended Mar. 31 — an increase of 23% from the same period in 2014.
Analysts are also looking for earnings per share of $1.63 in the quarter, an increase of 9.4% from 1Q 2014 EPS of $1.49.
Although those may be the metrics Wall Street is officially expecting, the “whisper” number is what many big-time traders pay closer attention to, and can be considered a more accurate reflection of what Wall Street actually expects. The whisper EPS for BWLD stock is $1.69.
Good news, right?
In the last 1- and 5-year periods, BWLD stock is up 34% and 323%, respectively, easily trumping the S&P 500‘s 15% and 95% respective gains. But those stupendous records could be on their last legs if BWLD misses on a few important metrics Tuesday.
What Investors Should Look For
Look no further than stock market darling Chipotle Mexican Grill, Inc. (NYSE:CMG) to see how quickly the markets can turn on you after one “subpar” quarter. A common misconception of individual investors is that when it comes to quarterly reports, it’s all about the bottom line, or EPS.
Not true. The CMG stock price actually plunged more than 7% last Wednesday alone — despite demolishing EPS growth expectations. CMG earned $3.88 per share, breezing past consensus $3.66 estimates; however, revenue growth was a little soft, and same-store sales grew at 10.4%, a far cry from the 11.8% Wall Street expected.
If anything, soft revenue and same-store sales will be to blame for a selloff in BWLD stock following its earnings on Tuesday. After all, in the fourth quarter of 2014, same-store sales grew 5.9% at company-owned restaurants and 5.1% at franchised restaurants — a far slower pace than the 11.9% and 11.1% clips seen in the first five weeks of 2015. Unrealistically high expectations could make for a perfect storm of pain.
Then again, with chicken wing prices up 28% year-over-year in March, revenues may well come in ahead of expectations … wholly at the expense of EPS. Unless there was a simultaneous shift in the product mix away from wings and in favor of high-margin beers, BWLD is at risk of a woeful EPS miss as well.
Even though I firmly believe that BWLD is still a tasty stock for the long term, there are a lot of hurdles the company needs to clear on Tuesday.
As of this writing John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
