Earnings Preview: BJ's Restaurants - Analyst Blog
July 20 2011 - 7:30AM
Zacks
A casual dinning restaurant chain,
BJ’s Restaurants, Inc (BJRI) is slated to release
its second quarter 2011 results on Thursday, July 20, after the
closing bell. The current Zacks Consensus Estimate for the second
quarter of 2011 is pegged at 27 cents per share, representing an
annualized growth of 17.68%.
With respect to earnings surprises,
BJ’s Restaurants has outperformed the Zacks Consensus Estimate in
all the four trailing quarters. The earnings surprise ranges from
flat to 31.6%, with the average at 23.9%. This implies that the
company has surpassed the Zacks Consensus Estimate by the same
magnitude over the last four quarters.
Previous Quarter
Recap
BJ’s first quarter 2011 earnings of
25 cents per share surpassed the Zacks Consensus Estimate of 19
cents, and increased 56.0% from 16 cents per share reported in the
prior-year quarter.
The better-than-expected results
were primarily driven by strong comparable restaurant sales
growth.
Revenues in the quarter shot up 19%
year over year to $144.9 million while comparable store sales rose
7.8% in the quarter from 4.4% in the prior-year quarter.
Operating margin climbed 230 basis
points (bps) from the year-ago quarter to 7.0%, reflecting a 90-bp
plunge in labor and benefits costs, 120-bp decline in occupancy and
operating costs, and a 20-bp fall in general and administrative
expenses.
Estimate Revision
Trend
Estimates for the upcoming quarter
remained unchanged over the last 60 days, implying that the
analysts are maintaining their outlook following the release of its
first quarter results. The current Zacks Consensus Estimates for
2011 and 2012 are pegged at $1.06 per share (reflecting a
year-over-year growth of 32.6%) and $1.27 per share (reflecting a
year-over-year growth of 20.1%), respectively.
Agreement of Estimate
Revisions
In the last 30 days, 1 out of the
15 analysts covering the stock raised the EPS estimate for both the
second quarter and fiscal 2011 while none moved downward.
Similarly, for fiscal 2012, 2 out of the 15 analysts covering
the stock hiked their estimates in the last 30 days while none
moved in the opposite direction. Thus analysts’ revision trends
reflect a positive inclination.
Over the last 7 days, none of the
analysts moved their estimates upward or downward for the second
quarter, 2011 and 2012, respectively, which implies the absence of
any near-term catalyst.
The analysts by and large are
impressed with the company’s improving traffic trends, efficient
operations, higher comps growth expectations and unit growth
potential. To ensure sales momentum, BJ’s continues to focus on
innovative offerings. Moreover, to combat rising food costs and
labor inflation to ensure margin expansion, the company intends to
implement a price rise of about 3% in the second quarter and in the
mid 2% range in both the third and fourth quarters of 2011.
Magnitude of Estimate
Revisions
Over the past 60 days, BJ’s
estimates for the second quarter of 2011 have not budged.
Therefore, the analysts expect the company to report in line.
However, the analysts remain
optimistic regarding fiscal 2011 and 2012. In the last 60 days,
estimates for both 2011 and 2012 inched up 1 cent to $1.06 and
$1.27, respectively.
Our Take
Currently, we expect BJ’s to post
second quarter results in line with estimates.
We have a Neutral recommendation on
BJ’s as the company boasts a unique position in the commoditized
hyper-competitive bar and grill segment, coupled with a viable
business strategy. BJ’s offer investors one of the strongest growth
stories in this space. The company remains well positioned to
sustain its growth momentum on the back of operating efficiencies
and innovative offerings.
The company also boasts a debt-free
balance sheet. It remains committed to its unit growth in 2011 and
beyond, and seeks to open at least 300 restaurants going
forward. Additionally, the core Californian market, which had
been badly hit by the housing downturn, has also begun to
recover.
However, we remain skeptical on the
stock as BJ’s is susceptible to higher input costs, which will
lessen the magnitude of margin rebound. The total commodity basket
is expected to grow 4% in the second half of fiscal 2011. The
company also faces stiff competition from other players and expects
to incur higher unemployment taxes in the second quarter of the
year.
Consequently, BJ’s has a Zacks #2
Rank, implying a short-term Buy recommendation on the stock. One of
BJ’s primary competitors, Ruth’s Hospitality Group
Inc. (RUTH) will report its second quarter 2011 results on
July 27, 2011.
BJ'S RESTAURANT (BJRI): Free Stock Analysis Report
RUTHS HOSPITLTY (RUTH): Free Stock Analysis Report
Zacks Investment Research
BJs Restaurants (NASDAQ:BJRI)
Historical Stock Chart
From May 2024 to Jun 2024
BJs Restaurants (NASDAQ:BJRI)
Historical Stock Chart
From Jun 2023 to Jun 2024