Buffalo Wild Wings

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An earnings short-squeeze candidate in the restaurants complex is Buffalo Wild Wings ( BWLD), which is set to release numbers on Tuesday after the market close. This is an owner, operator and franchisor of restaurants featuring a variety of menu items, including its Buffalo, New York-style chicken wings spun in any of its 14 signature sauces or four signature seasonings. Wall Street analysts, on average, expect Buffalo Wild Wings to report revenue of $250.92 million on earnings of 95 cents per share.

This company is aiming to top Wall Street estimates for the third quarter in a row. Last quarter, it beat Wall Street estimates with a profit of 73 cents per share against a mean estimate of 67 cents per share. Buffalo Wild Wings has registered double-digit revenue growth during the past four quarters. The company has averaged year-over-year revenue growth of 27.8% over the last four quarters. The company is looking to extend its trend of income increases for the fourth quarter in a row this earnings period.

The current short interest as a percentage of the float for Buffalo Wild Wings is rather high at 11.4%. That means that out of the 18.15 million shares in the tradable float, 2.07 million are sold short by the bears. This is a low float high short interest situation, so any positive earnings and bullish guidance from BWLD could easily spark a notable short-squeeze post-earnings.

From a technical perspective, BWLD is currently trading above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock gapped up big back in February from around $70 to over $80 a share on monster volume. Since gapping up big, this stock has trended above the gap and has found buying interest whenever it's dropped into the low $80s.

If you're a bull on BWLD, then I would consider long-biased trades after they report if this stock can manage to trigger a near-term breakout above $86.19 to $87.12 (its 50-day) a share with high-volume. Look for volume on a move above those levels that's near or well above its three-month average action of 710,495 shares. If we get that action, then look for BWLD to make a run at its recent high of $94.81 a share or possibly higher post-earnings.

I would simply avoid BWLD or look for short-biased trades if the stock fails to trigger that breakout, and then drops back below some near-term support at $81.97 a share with heavy volume. If we get that action, then look for BWLD to potentially fill some of that massive gap-up from back in February.

Buffalo Wild Wings shows up on a list of 10 Small-Cap Stocks Poised to Rise, History Shows.

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