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Here's Why Investors Should Invest in BJ's Restaurants (BJRI)

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BJ's Restaurants, Inc. (BJRI - Free Report) is benefiting from solid comps growth, expansion initiatives, digitalization and menu innovation. Robust off-premise sales continue to aid the company’s performance.

This Zacks Rank #1 (Strong Buy) company also has an impressive long-term earnings growth rate of 15%. In the past 30 days, earnings estimates for 2023 have witnessed upward revisions of 4.5% to 93 cents. The company’s sales and earnings in 2023 are likely to witness growth of 5.6% and 447.1% year over year, respectively. Let’s delve deeper.

Growth Drivers

The company is benefiting from solid comparable restaurant sales. Comparable restaurant sales, in the fiscal second quarter, increased 4.7% year over year compared with a rise of 11.7% reported in the prior-year quarter. The upside was primarily backed by an increase in the average check of approximately 7.6% and menu-price increases, partially offset by a 2.9% decline in guest traffic and changes in mix. For fiscal 2023, our model predicts comps to grow 5% year over year.

Robust expansion effort continues to drive growth. In fiscal 2022, the company opened six new restaurants and reported solid sales with respect to the same. BJRI remains steadfast in its commitment to expand its presence to at least 425 restaurants domestically. Given the level of new restaurant expansion, combined with driving positive comparable restaurant sales, the company expects high-single-digits revenue growth for the coming years.

BJ’s Restaurants’ extensive focus on refining and streamlining its menu is the key driver for improved traffic. It introduced a new menu in July 2023, consisting of 15% less items. Through this approach, the company will ensure improving its daily execution by increasing the repetition of guest favorites along with reducing preparation time. BJRI expects these characteristics to grant it growth in sales and margins in the coming period.

Meanwhile, the company is working on several initiatives to boost its off-premise experience. During the fiscal second quarter, the company initiated the piloting of a digital order tracker and integrated it with the digital curbside check-in portal. The initiative provides real-time progress information for guests ordering take-out, curbside and white-label delivery. The company remains optimistic in this regard and anticipates the initiative to reduce friction throughout the guest experience and optimize all channels, including take-out, curbside pickup and delivery, thereby paving a path for growth in the upcoming periods.

Although, the company’s shares have gained 1.2% compared with the industry’s rise of 3.7%, the aforementioned factors are likely to drive the stock higher.


Zacks Investment Research
Image Source: Zacks Investment Research


Other Key Picks

Below we present some other top-ranked stocks in the Zacks Retail-Wholesale sector.

Carrols Restaurant Group, Inc. (TAST - Free Report) presently sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 67.9%, on average. Shares of TAST have surged 339.3% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for TAST’s 2023 sales and earnings per share (EPS) indicates 8.1% and 124.3% growth, respectively, from the year-ago period’s levels.

Arcos Dorados Holdings Inc. (ARCO - Free Report) currently carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth rate of 9.5%. The stock has gained 21.8% in the past year.

The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS suggests a rise of 19% and 11.6%, respectively, from the year-ago period’s levels.

Domino's Pizza, Inc. (DPZ - Free Report) carries a Zacks Rank #2 at present. It has a trailing four-quarter earnings surprise of 4.8%, on average. Shares of DPZ have gained 12.2% in the past year.

The Zacks Consensus Estimate for DPZ’s 2023 EPS implies an increase of 9.6% from the year-ago period’s level.

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