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Why Is BJ's Restaurants (BJRI) Up 10.5% Since Its Last Earnings Report?
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A month has gone by since the last earnings report for BJ's Restaurants, Inc. (BJRI - Free Report) . Shares have added about 10.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is BJRI due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
BJ’s Restaurants Q4 Earnings & Revenues Top Estimates
BJ’s Restaurants reported better-than-expected earnings and revenues in fourth-quarter 2017 results.
Adjusted earnings of 37 cents per share surpassed the Zacks Consensus Estimate of 32 cents by 15.6%. The bottom line, however, fell 32.7% year over year due to higher costs.
Quarterly revenues of $261.1 million topped the consensus estimate of $259.78 million by 0.5%, but decreased 1.7% from the prior-year quarter, primarily due to one less operating week.
Adjusting for the one extra week in 2016, net revenues for the fourth quarter of 2017 grew 6.9% year over year. The revenue growth was attributable to comps growth and increased traffic.
The company’s differentiated sales-driving efforts have reflected in the top-line performance. BJ’s high quality slow-roasted menu has been favoring growth in foot traffic while daily Brewhouse Specials have contributed to mid-week sales growth.
However, cost pressures have affected the company’s margins and somewhat dented the bottom line.
Comps, Expenses & Operating Margins
Comps in the quarter grew 1.6%, comparing favorably with the prior-quarter’s decrease of 1.7% and year-ago quarter’s decline of 2.2%. The comps grew on strong traffic gains of 0.7% in the quarter.
Labor costs, as a percentage of sales, increased 90 basis points (bps) in the quarter to 35.8% whereas, operating costs were 21.4% of net sales, up 70 bps year over year.
Restaurant-level margin was 16.7%, down 200 bps from the year-ago quarter. Moreover, operating margin decreased 210 bps to 4.2%.
In order to counter high costs prevalent in the industry, the company is undertaking various cost savings and efficiency initiatives that would eventually drive margins.
Balance Sheet
As of Jan 2, 2018, cash and cash equivalents totaled $24.3 million, compared with $22.8 million as of Jan 3, 2017.
Total debt increased to $163.5 million at the end of fourth-quarter 2017, from $148 million at the end of fourth-quarter 2016.
During the fourth quarter, the company repurchased approximately 0.3 million shares of its common stock at a cost of approximately $9.6 million.
Additionally, the company paid its first quarterly dividend of 11 cents per share of common stock on Dec 4, 2017. On Feb 20, 2018, management declared a cash dividend of 11 cents per share of common stock payable Mar 27, 2018, to shareholders of record at the close of business on Mar 13, 2018.
2017 Results & Restaurant Openings
Total revenues in 2017 grew 3.9% year over year to $1 billion. Excluding the extra operating week, revenues increased 6.2% from the prior year. Comps in the year declined 0.7%. Adjusted EPS in 2017 came in at $1.41 per share.
BJ’s opened two restaurants by the end of fourth quarter and 10 new restaurants in the year. For fiscal 2018, the company plans to open four-six restaurants.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter compared to two lower.
At this time, BJRI has an average Growth Score of C. Its Momentum is doing a lot better with an A. The stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for value and to a lesser degree growth.
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise BJRI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is BJ's Restaurants (BJRI) Up 10.5% Since Its Last Earnings Report?
A month has gone by since the last earnings report for BJ's Restaurants, Inc. (BJRI - Free Report) . Shares have added about 10.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is BJRI due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
BJ’s Restaurants Q4 Earnings & Revenues Top Estimates
BJ’s Restaurants reported better-than-expected earnings and revenues in fourth-quarter 2017 results.
Adjusted earnings of 37 cents per share surpassed the Zacks Consensus Estimate of 32 cents by 15.6%. The bottom line, however, fell 32.7% year over year due to higher costs.
Quarterly revenues of $261.1 million topped the consensus estimate of $259.78 million by 0.5%, but decreased 1.7% from the prior-year quarter, primarily due to one less operating week.
Adjusting for the one extra week in 2016, net revenues for the fourth quarter of 2017 grew 6.9% year over year. The revenue growth was attributable to comps growth and increased traffic.
The company’s differentiated sales-driving efforts have reflected in the top-line performance. BJ’s high quality slow-roasted menu has been favoring growth in foot traffic while daily Brewhouse Specials have contributed to mid-week sales growth.
However, cost pressures have affected the company’s margins and somewhat dented the bottom line.
Comps, Expenses & Operating Margins
Comps in the quarter grew 1.6%, comparing favorably with the prior-quarter’s decrease of 1.7% and year-ago quarter’s decline of 2.2%. The comps grew on strong traffic gains of 0.7% in the quarter.
Labor costs, as a percentage of sales, increased 90 basis points (bps) in the quarter to 35.8% whereas, operating costs were 21.4% of net sales, up 70 bps year over year.
Restaurant-level margin was 16.7%, down 200 bps from the year-ago quarter. Moreover, operating margin decreased 210 bps to 4.2%.
In order to counter high costs prevalent in the industry, the company is undertaking various cost savings and efficiency initiatives that would eventually drive margins.
Balance Sheet
As of Jan 2, 2018, cash and cash equivalents totaled $24.3 million, compared with $22.8 million as of Jan 3, 2017.
Total debt increased to $163.5 million at the end of fourth-quarter 2017, from $148 million at the end of fourth-quarter 2016.
During the fourth quarter, the company repurchased approximately 0.3 million shares of its common stock at a cost of approximately $9.6 million.
Additionally, the company paid its first quarterly dividend of 11 cents per share of common stock on Dec 4, 2017. On Feb 20, 2018, management declared a cash dividend of 11 cents per share of common stock payable Mar 27, 2018, to shareholders of record at the close of business on Mar 13, 2018.
2017 Results & Restaurant Openings
Total revenues in 2017 grew 3.9% year over year to $1 billion. Excluding the extra operating week, revenues increased 6.2% from the prior year. Comps in the year declined 0.7%. Adjusted EPS in 2017 came in at $1.41 per share.
BJ’s opened two restaurants by the end of fourth quarter and 10 new restaurants in the year. For fiscal 2018, the company plans to open four-six restaurants.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter compared to two lower.
BJ's Restaurants, Inc. Price and Consensus
BJ's Restaurants, Inc. Price and Consensus | BJ's Restaurants, Inc. Quote
VGM Scores
At this time, BJRI has an average Growth Score of C. Its Momentum is doing a lot better with an A. The stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for value and to a lesser degree growth.
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise BJRI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.