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Why Is BJ's Restaurants (BJRI) Up 5.8% Since the Last Earnings Report?

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About a month has gone by since the last earnings report for BJ's Restaurants, Inc. (BJRI - Free Report) . Shares have added about 5.8% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

BJ's Restaurants Misses Q3 Earnings & Revenue Estimates

BJ’s Restaurants reported lower-than-expected results for third-quarter fiscal 2017.

Earnings and Revenue Discussion

Adjusted earnings of 15 cents per share missed the Zacks Consensus Estimate of 24 cents by 37.5%. Moreover, earnings declined 50% from the year-ago figure of 30 cents, primarily due to increased expenses and adverse effects of the recent hurricanes — Harvey and Irma.

Revenues of $247.0 million were up 5.7% year over year owing to an increase in total operating weeks. However, revenues missed the consensus mark of $248.6 million by 0.7%.

Inside the Headline Numbers

Comps in the quarter dropped 1.7%, wider than the prior quarter’s decrease of 1.4% but narrower than the year-ago decline of 3.4%.

Notably, hurricane Irma impacted comps in September. Excluding these effects, comps were up 1% in the month with guest counts remaining flat. Meanwhile, so far in October, the company has witnessed comps growth of around 2%.

In fact, the recent positive sales trend partly reflects the success of the company’s initiatives focused onoff-premise sales, Daily Brewhouse Specials and other value offerings Additionally, BJ’s Restaurants’ slow roasted menu items continues to perfrom well

However, restaurant level margin was 14.2%, down 350 basis points (bps) year over year. Moreover, operating margin decreased 330 bps to 0.6%. Nevertheless, the company is focused on improving its financial returns and enhancing share holders’ value.

Restaurant Openings

BJ’s Restaurants opened eight restaurants by the end of fiscal third quarter. The company has scheduled the opening of the remaining two restaurants in Bowie, MD, and Taylor, MI, in the fourth quarter. This will help the company achieve its goal of opening 10 new restaurants in fiscal 2017.

In fact, in fiscal 2018, the company plans to open four to six restaurants as compared with 10 in the current year.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

VGM Scores

Currently, the stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

The stock a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


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