What To Expect As Buffalo Wild Wings Spreads Across The Country

Apr.25.14 | About: Buffalo Wild (BWLD)

Buffalo Wild Wings Inc. (NASDAQ:BWLD) is set to report FQ1 2014 earnings after the market closes on Monday, April 28th. Buffalo Wild Wings is a casual restaurant and sports bar chain that features some of sports fans' favorite things; lots of big TVs, chicken wings, and beer. BWLD has beaten Wall Street expectations on EPS 3 quarters in a row, and has topped revenue projections twice. Last quarter, BWLD reported a 12% year-over-year revenue increase, and this quarter, Wall Street expects that rate to pick up to 19%. Profitability is also expected to increase dramatically; this quarter, the Street is calling for an EPS gain of 49c per share compared to FQ1 of last year. Here's what investors are looking for on Monday.

The information below is derived from data submitted to the Estimize.com platform by a set of Buy-Side and Independent analyst contributors.

(Click Here to see Estimates and Interactive Features for Buffalo Wild Wings)

The current Wall Street consensus expectation is for Buffalo Wild Wings to report $1.36 EPS and $363.19M revenue, while the current Estimize.com consensus from 16 Buy-Side and Independent contributing analysts is $1.34 EPS and $364.75M in revenue. This quarter, the buy-side, as represented by the Estimize.com community, is expecting Buffalo Wild Wings to beat the Wall Street consensus on revenue, but come up short on EPS.

By tapping into a wider range of contributors, including hedge-fund analysts, asset managers, independent research shops, students, and non-professional investors, Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time, but more importantly, it does a better job of representing the market's actual expectations. It has been confirmed by Deutsche Bank Quant. Research and an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we are seeing a larger earnings differential than usual for Buffalo Wild Wings.

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The distribution of estimates published by analysts on the Estimize.com platform range from $1.19 to $1.38 EPS and from $360.00M to $370.50M in revenues. This quarter, we're also seeing a larger-than-usual distribution of estimates on Buffalo Wild Wings.

The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signals less agreement in the market, which could mean greater volatility post-earnings.

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Over the past 4 months, the Wall Street EPS forecast has increased from $1.29 to $1.36, while the Estimize consensus rose from $1.30 to $1.34. Meanwhile, Wall Street reduced its revenue consensus from $367.61M to $363.19M, while the Estimize consensus sank from $368.49M to $363.19M. Timeliness is correlated with accuracy, and the directionality of analyst revisions is often a leading indicator. Here, we see rising EPS projections and falling revenue estimates from both groups.

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The analyst with the highest estimate confidence rating this quarter is turbinecity, who projects $1.36 EPS and $363.69M in revenue. turbinecity was our Winter 2014 season winner, and is ranked 5th overall among over 4,300 contributing analysts. Over the past 2 years, turbinecity has been more accurate than Wall Street in forecasting EPS and revenue 59% and 54% of the time respectively throughout 2,039 estimates. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research, which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case, turbinecity is expecting Buffalo Wild Wings to report in line with the Wall Street consensus on EPS, and report between the Street and the Estimize community's forecasts on revenue.

Buffalo Wild Wings restaurants are spreading across the country, and they continue to be an innovator in integrating technology to the restaurant experience. They, along with several other chain restaurants, are working on installing tablet computers on every table to take orders, provide entertainment, and possibly even accept credit card swipes to pay the bill whenever diners are ready to go. In a time when some of the established chain restaurants are losing business to the fast casual players like Chipotle (NYSE:CMG) and Panera Bread (NASDAQ:PNRA), Buffalo Wild Wings seems to be doing quite well for itself.

Disclosure: None