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BJ's Restaurants (BJRI) Q4 Earnings & Revenues Top, Stock Up

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BJ's Restaurants (BJRI) Q4 Earnings & Revenues Top, Stock Up

BJ's Restaurants' (BJRI) sales-driving efforts help it achieve top-line growth in the fourth quarter. High costs somewhat hurt earnings.

BJ’s Restaurants, Inc. BJRI reported better-than-expected earnings and revenues in fourth-quarter 2017.

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.

BJ's Restaurants, Inc. Price, Consensus and EPS Surprise

 

BJ's Restaurants, Inc. Price, Consensus and EPS Surprise | BJ's Restaurants, Inc. Quote

 

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.

Encouraged by BJ’s growth in comps and foot traffic, shares have risen 11.1% in after-hours trading on Feb 22. Also, the company’s shares have rallied 23.4% in the past six months, outperforming the industry’s gain of 3.6%.

Let’s delve deeper into the numbers.




Comps, Expenses & Operating Margins

Comps in the quarter grew 1.6%, comparing favorably with the prior-quarter’s decrease of 1.7% and the 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.

Zacks Rank & Peer Releases

BJ’s carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chipotle Mexican Grill CMG posted mixed fourth-quarter 2017 results, with adjusted earnings of $1.34 per share, surpassing the consensus estimate of $1.32 by 1.5%. Earnings also grew 143.6% year over year on lower costs and higher revenues.

McDonald's MCD reported fourth-quarter 2017 adjusted earnings per share (EPS) of $1.71, beating the consensus mark of $1.59 by 7.5%. Earnings improved 19% from the year-ago quarter (16% in constant currency). The upside reflects strong operating performance and G&A savings.

Domino’s DPZ fourth-quarter 2017 earnings matched the Zacks Consensus Estimate while revenues missed the same. Adjusted earnings came in at $1.94 per share and improved 31.1% year over year on higher net income and lower share count as a result of share repurchases.

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