Buffalo Wild Wings (BWLD) Stock | Going Wild After Earnings


Buffalo Wild Wings, Inc. (NASDAQ: BWLD)

Second quarter earnings for Buffalo Wild Wings were announced yesterday, and they look pretty appetizing.  Maybe not quite as appetizing as one of Buffalo Wild Wings’ big bowls of chicken wings, but their earnings looked pretty tasty nonetheless.


BWLD chart

BWLD Earnings Report

The most impressive piece of Buffalo Wild Wings’ earnings report was the 16.5% increase in revenue compared to the same quarter last year.  Total revenue for the second quarter came in at $426.4 million.  Same store sales also rose 4.2% at company-owned restaurants and 2.5% at franchised restaurants.  Net earnings and earnings per share decreased by 9.3% and 9.9% respectively compared to last year because of what CEO Sally Smith called “a challenging cost environment.”  Chicken wings alone cost 26% more than they did this time last year.  Labor costs also increased because of higher wages, higher benefits costs, and the addition of “Guest Experience Captains” at all company-owned restaurants.  The positive growth numbers trumped the negative cost details for investors and share prices closed up just shy of 9% in after  hours trading.  They touched as high as $190.50 or up over 11% in that after hours trading session.


Buffalo Wild Wings Looking Forward

On the earnings call, Smith also described a few changes that the company is anticipating for the remainder of 2015.  Most importantly, the net earnings growth for full year 2015 was revised down to 13% from the 18% that was previously offered in their first quarter earnings report.  This decrease was mainly attributed to a deal that was finalized in July which will see Buffalo Wild Wings buy back 41 franchise locations to bring them under the company-owned umbrella.  The closing of that deal in August will be reflected in higher expenses for the next quarter.  Smith did offer a glimpse of sales for the start of the third quarter that is now underway as well.  In the first four weeks of the period, same store sales have increased over the previous year 4.8% at company-owned restaurants and 2.0% at franchised restaurants.  And those increases are over a strong base of comparison because this time last year saw the Men’s World Cup Finals bringing in extra customers to Buffalo Wild Wings locations nationwide.  Smith was hopeful for the potential of two recent company initiatives that might help drive revenue growth in the near-term and long-term.  Their “World of Sports” campaign is aiming to make Buffalo Wild Wings a favorite sports viewing destination for every sport and the “B-Dubs® Fast Break” initiative is striving to increase lunchtime business.


History Repeats Itself?

Although share prices moved immediately in after hours trading, Buffalo Wild Wings does have some history of going wild after a good earnings report.  A brief look back at stock performance after a positive earnings report shows that moves higher tend to continue higher on the next day 67% of the time.  Overall, the widening gap trend is not quite as consistent.  In the last decade, BWLD has widened a positive or negative gap started in after hours trading 55% of the time.  Considering this is a positive earnings gap though, that 67% number looks pretty appetizing.


Company Profile

Buffalo Wild Wings, Inc. is a casual dining restaurant and sports bar franchise headquartered in Minneapolis, Minnesota.  Founded in 1982 as a restaurant named “Buffalo Wild Wings & Weck” in Columbus, Ohio, it has since gone on to drop the “& Weck” from its name and grow to over 1,000 locations across the US, Canada, Mexico, and The Philippines.  Specializing in chicken wings, sauces, sandwiches, and burgers, Buffalo Wild Wings generates over $1 billion in revenue per year.