BJ's Restaurants Beats in 4Q

BJ’s Restaurants Inc. (NasdaqGS:BJRI - News) reported fourth-quarter 2011 adjusted earnings of 34 cents per share, surpassing the Zacks Consensus Estimate of 32 cents as well as the prior-year earnings of 24 cents. The upside was attributable to double-digit growth in the top line and strong comparable restaurant sales growth. One extra operating week in the fourth quarter of 2011 also led to an easy comparison. In full-fiscal 2011, earnings were $1.08 versus 82 cents recorded in the previous year.

Inside the Headline Numbers

Revenues in the reported quarter grew 29.3% year over year to $171.8 million. The increase was attributable to solid increases in both comparable restaurant sales and new restaurant openings. Revenue increased 20.8% year over year in full-fiscal 2011.

BJ’s sustained its top-line growth momentum in the fourth quarter on the back of operating efficiencies, innovative offerings and expansion, which have helped the casual dining restaurant operator to drive traffic.

Comparable restaurant sales grew 5.1% compared with 5.9% in the prior-year quarter. Operating margin was up 120 basis points (bps) year over year at 7.6%, reflecting a 50-bp drop in cost of sales, fall of 100 bps in occupancy and operating costs and 40 bps in general and administrative expenses, as well as a 40 bp reduction in depreciation and amortization, partially offset by a 40-bp spike in restaurant opening and a 50-bp rise in labor and benefits costs.

Store Update

The company opened 4 restaurants during the fourth quarter of 2011.

For fiscal 2012, the company plans to open 15 restaurants compared with 13 in fiscal 2011.

Financial Position

BJ’s ended the quarter with cash and cash equivalents of $45.4 million and shareholders equity of $332.4 million. As of September 27, 2011, BJ’s long-term debt liability was nil.

Outlook

We expect estimates to go up in the coming days as the company posted strong results. Moreover, we see the company as well positioned to sustain its growth momentum and generate improved earnings in future.

BJ’s Restaurants competes with Darden Restaurants Inc. (NYSE:DRI - News) and currently retains the Zacks #1 Rank, which translates into a short-term ‘Strong Buy’ rating. We are also maintaining our long-term Outperform recommendation on the stock.

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