In-Line 4Q for BJ's Restaurants - Analyst Blog
February 21 2013 - 4:50AM
Zacks
BJ’s Restaurants Inc.’s (BJRI) reported
fourth-quarter 2012 adjusted earnings of 27 cents per share were in
line with the Zacks Consensus Estimate, but were 20.6% lower than
the year-ago level. On a reported basis, earnings came in at 24
cents per share, down 29.4% year over year.
Despite a modest increase in the top line, the bottom line skid
year over year due to a sharp rise in costs. Additionally, one less
operating week compared to the year-ago period affected earnings to
some extent. The extra operating week in fiscal 2011 had
contributed around 6 cents to earnings per share.
Inside the Headline Numbers
Revenues in the reported quarter grew 8.0% year over year to
$184.8 million, which matched the Zacks Consensus Estimate despite
tough comparisons as the year-ago quarter included an extra
operating week. Excluding the extra operating week, total revenues
increased approximately 17%.
Despite macro issues like higher television viewership of the
national political debates prior to the presidential election in
November and higher prices of gasoline, which deterred consumers
from dining out in October, the company witnessed growth in
revenues and same store sales. Hurricane Sandy had resulted in
store closures for quite some time. However, this did not mar the
company’s sales performance to a great extent.
The increase in revenues was attributable to modest growth in
both comparable restaurant sales and new restaurant openings.
Comparable restaurant sales grew 3.0% compared with 5.1% in the
prior-year quarter reflecting growth for the12th consecutive
quarter.
Operating margin was down 330 basis points (bps) year over year
at 4.3%, reflecting a spike in the overall cost structure partially
compensated by a fall in labor and benefits costs.
Full-Year Update
In fiscal 2012, BJ’s Restaurant’s adjusted earnings per share
were $1.12, flat year over year. Revenues grew 14% to $709.3
million buoyed by a 3.2% increase in comps as well as higher store
base.
Store Update
The company opened five restaurants during the fourth quarter.
At quarter-end, the company had 130 units in 15 states.
The company’s 2013 developmental pipeline consists of as many as 17
new restaurants including f shifting of one of the company’s
small format "Pizza and Grill" restaurants in Eugene, Ore. to
a new site in Eugene, where it can house a larger-format
"Brewhouse" restaurant.
Our Take
Although BJ’s delivered a decent fourth quarter in terms of
sales, a steep decline in bottom-line keeps us cautious. We believe
top-line growth is driven by several sales-building measures, which
are pushing up its cost structure.
However, on a positive note, the company remains on an expansion
spree, which will provide it with greater scale and consequent cost
efficiency, going forward. BJ’s believes that there is room for at
least 425 restaurants in the U.S.
The food cost outlook also appears relatively benign for fiscal
2013. The company will also likely take some pricing action in 2013
that could safeguard its bottom line going forward.
BJ’s Restaurants currently retains a Zacks Rank #3 (Hold). Some
restaurant companies that are worth a look at the current level are
Red Robin Gourmet Burgers Inc. (RRGB) carrying a
Zacks Rank #1 (Strong Buy) as well as Burger King Worldwide
Inc. (BKW) and The Cheesecake Factory
Inc. (CAKE) both carrying Zacks Rank #2 (Buy).
BJ'S RESTAURANT (BJRI): Free Stock Analysis Report
BURGER KING WWD (BKW): Free Stock Analysis Report
CHEESECAKE FACT (CAKE): Free Stock Analysis Report
RED ROBIN GOURM (RRGB): Free Stock Analysis Report
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