BJ's Restaurants Upgraded - Analyst Blog
January 25 2012 - 11:27AM
Zacks
We have recently upgraded our recommendation on BJ's
Restaurants Inc. (BJRI) from Neutral to Outperform. The
upgrade was based on solid same-store sales (comps), pricing power,
menu innovation, unit expansion and a debt-free balance sheet.
BJ's Restaurants has been exhibiting strong comps momentum for
quite some time. All the operating regions of BJ’s Restaurants’ are
showing positive restaurant comparable sales.
The company is consistently undertaking several sales building
initiatives like a new guest loyalty program, which has been
successfully tested and is expected to be rolled out in the first
half of 2012, a new catering program as well as efficiencies and
price increases, which will more than offset cost escalation.
Over the last two years, BJ’s Restaurants has introduced about
50 new menu items representing about 12% of total sales. The new
burger line up unveiled in early November will likely add some more
flavors to the fourth quarter’s earnings.
According to management, the company has kept most of its
pricing power in reserve during the past couple of years. Given a
relatively low guest check average compared to most of its casual
dining peers, the company will likely use some of its pricing power
in 2012 to fight inflation. The company expects its menu pricing to
be around 3% to 3.5% for fiscal 2012.
BJ’s restaurants remains in an expansion mode. For 2012,
management plans to open 15 restaurants and all sites are
identified. Looking forward to 2013, the company plans low
double-digit capacity increases per year in the approximate range
of 10% to 12%. The company also boasts a debt-free balance sheet.
Estimate Revisions
In the last 30 days, 5 out of 16 analysts increased the estimate
for the upcoming quarter. Magnitude of estimate was raised by a
penny to 32 cents.
BJ’s restaurants, which competes with the likes of
Buffalo Wild Wings Inc. (BWLD) and Sonic
Corp. (SONC), currently retains a Zacks #1 Rank, which
translates into a short-term Strong Buy rating.
BJ'S RESTAURANT (BJRI): Free Stock Analysis Report
BUFFALO WLD WNG (BWLD): Free Stock Analysis Report
SONIC CORP (SONC): Free Stock Analysis Report
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