Back to top

Bull of the Day: BJ's Restaurants (BJRI)

Read MoreHide Full Article

Founded back in 1978, BJ’s Restaurants Inc. (BJRI - Free Report) is a California-based casual-dining restaurant and brewery chain. Their restaurants are either operated as a Brewery, which includes a brewery within it, or as a Brewhouse, which receives the beer it sells from one of its breweries or independent third-party brewers. BJ’s also operates a smaller format Pizza & Grill restaurant. Popular menu items include Chicago-style pizza and the unique dessert, the Pizookie.

BJ’s Q2 earnings performance marked the company’s third consecutive beat, with the bottom line surpassing our estimate by over 23%. Revenues also topped the Zacks Consensus, and grew 8.2% year-over-year. Notably, comparable restaurant sales jumped 5.6% thanks to a 2.5% increase in traffic, BJ’s best sales performance in several quarters.

Along with new initiatives like its slow-cooked menu, delivery, and handheld server tablets, management attributed this strong growth to its new menu items, off-premise sales, and Daily Brewhouse Specials.

BJRI also reported restaurant-level operating margin expansion of 120 basis points to 19% due to improving comps. Additionally, food and packaging costs dropped 120 basis points, and labor, which is the company’s biggest line item expense, was basically flat as a percentage of revenue for the quarter.

The company opened two new restaurants, including its 200th restaurant, and is on track with its goal of opening five new locations this year.

CEO Greg Trojan noted that during Q2, 42 of BJ’s restaurants set daily sales records, while 23 set weekly sales records. “As we move into the second half of 2018, we remain focused on driving sales and traffic and taking market share in the casual dining segment of the restaurant industry,” Trojan said.

BJ's Restaurants, Inc. Price, Consensus and EPS Surprise

BJ's Restaurants, Inc. Price, Consensus and EPS Surprise | BJ's Restaurants, Inc. Quote

Thanks to these results, analysts have taken notice of BJRI’s overall strength; the company has seen nine upwards revisions in the last 60 days, pushing the stock towards a Zacks Rank #1 (Strong Buy).

On top of this, the Zacks Consensus Estimate for fiscal 2018 has increased 13 cents over the past two months, now sitting at $2.21 per share. Next year looks pretty good too, and earnings could jump about 9.5%. The 2019 consensus estimate has increased from $2.17 per share to $2.32 per share over the same time period.

Shares of BJRI have been on a nice run after struggling to pick up steam in 2017. Year-to-date, the stock is up well over 95%, and shares have gained more than 123% in the past one-year period. While its industry, Retail-Restaurants, has not been the best performer lately compared to the S&P 500, BJ’s sits at the top.

If you’re looking for a great restaurant stock to add to your portfolio, make sure to keep BJRI on your list.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early. See Zacks' 3 Best Stocks to Play This Trend >>

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

BJ's Restaurants, Inc. (BJRI) - free report >>

More from Zacks Bull of the Day

You May Like