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BJ's Restaurants (BJRI) Tops Q4 Earnings & Sales; Stock Up

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Shares of BJ’s Restaurants, Inc. (BJRI - Free Report) rose nearly 3% in afterhours trading on Feb 23, after the company reported better-than-expected fourth-quarter 2016 results.

Earnings and Revenue Discussion

Adjusted earnings of 55 cents per share surpassed the Zacks Consensus Estimate of 40 cents by 37.5%. Further, earnings increased 27.9 % from the year-ago figure of 43 cents, primarily due to higher revenues.
 

 

Revenues of $265.6 million were up nearly 14% year over year owing to new restaurant growth. Moreover, revenues topped the consensus mark of $264.7 million by 0.3%.

Inside the Headline Numbers

Comps in the quarter declined 2.2% in comparison with the prior-quarter comps decrease of 3.4 % and the year-ago quarter comps growth of 0.7%. Though the company’s comps declined mainly due to a challenging sales environment, it outpaced the industry’s comps in the fourth quarter.

Restaurant level margin was 18.7%, down 120 basis points (bps) year over year. Moreover, operating margin decreased 50 bps to 6.3%. A 100 bps increase in cost of sales, as a percentage of total revenues, was more than offset by a 50 bps and 20 bps decline in occupancy and operating costs as well as general and administrative expenses, respectively.

2016 Results

BJ’s Restaurants’ full-year adjusted earnings of $1.88 came above the Zacks Consensus Estimate of $1.73 by 8.7%. Furthermore, it increased 13.9% from the year-ago quarter figure of $1.65 on the back of higher revenues.

Full-year revenues of $993.1 million slightly topped the Zacks Consensus Estimate of nearly $992 million and increased 8% year over year.

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

 

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

Going Forward

In order to navigate the challenging macro environment, the company is implementing several major sales building initiatives, which have been tested over the past year.

Firstly, it has begun the installation of new slow roasting ovens in its restaurants and expects to have this new cooking equipment at all its locations by May. Secondly, the company plans to roll out new server hand-held ordering tablets in all its restaurants. Thirdly, given the fact that off-premise sales represent a considerable revenue growth opportunity, BJ’s Restaurants is presently testing third-party delivery services. These services are likely to leverage its existing mobile app and online ordering system. Lastly, the company will be expanding its daily Brewhouse specials, which showcase several of its most popular signature menu items at attractive prices.

Along with these four strategic initiatives, the company has developed a deep pipeline of new menu items, loyalty program enhancements and other productivity initiatives that will be executed in 2017.

Meanwhile, the company has reduced the number of planned restaurant openings to 10 in 2017 compared with 17 restaurant openings in 2016. The reduction is due to the company’s continued belief that the sales headwinds in the industry call for greater focus on traffic and sales building initiatives.

Zacks Rank & Stocks to Consider

BJ’s Restaurants has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Potbelly Corporation (PBPB - Free Report) , Dave & Buster's Entertainment, Inc. (PLAY - Free Report) and Darden Restaurants, Inc. (DRI - Free Report) . While Potbelly sports a Zacks Rank #1 (Strong Buy), Dave & Buster's and Darden carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Potbelly’s 2017 earnings climbed 2.2% over the past 30 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 39.82%.

Dave & Buster's earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 37.81%. Meanwhile, for fiscal 2017, EPS is expected to improve 35.1%.

Darden’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 2.57%. Further, for fiscal 2017, EPS is expected to grow 11.1%.

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