Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified

Buffalo Wild Wings

(

BWLD

) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Buffalo Wild Wings as such a stock due to the following factors:

  • BWLD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $73.3 million.
  • BWLD has traded 1.7 million shares today.
  • BWLD is trading at 14.39 times the normal volume for the stock at this time of day.
  • BWLD crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on BWLD:

Buffalo Wild Wings, Inc. owns, operates, and franchises restaurants primarily in the United States. It offers chicken and various food and beverage items, as well as serves bottled beers, wines, and liquor. BWLD has a PE ratio of 37.4. Currently there are 8 analysts that rate Buffalo Wild Wings a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Buffalo Wild Wings has been 383,600 shares per day over the past 30 days. Buffalo Wild Wings has a market cap of $3.1 billion and is part of the services sector and leisure industry. The stock has a beta of 1.18 and a short float of 9% with 3.22 days to cover. Shares are up 13.6% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Buffalo Wild Wings as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 20.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 71.26% and other important driving factors, this stock has surged by 68.67% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • BUFFALO WILD WINGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BUFFALO WILD WINGS INC increased its bottom line by earning $3.80 versus $3.06 in the prior year. This year, the market expects an improvement in earnings ($5.05 versus $3.80).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 72.9% when compared to the same quarter one year prior, rising from $16.38 million to $28.32 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, BUFFALO WILD WINGS INC's return on equity exceeds that of both the industry average and the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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