BJ's Restaurants (BJRI) to Report Q3 Earnings: What's in Store?
BJ's Restaurants, Inc. BJRI third-quarter fiscal 2023 results are likely to increase on a year-over-year basis.
In the previous quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 56.3% while the revenues missed the same by 0.2%.
BJ's Restaurants’ earnings topped the consensus mark in all trailing four quarters, the average surprise being 121.2%.
How Are Estimates Placed?
The Zacks Consensus Estimate for third-quarter earnings is pegged at a loss of 2 cents per share. In the prior-year quarter, BJRI reported a loss per share of 25 cents.
BJ's Restaurants, Inc. Price and EPS Surprise
BJ's Restaurants, Inc. price-eps-surprise | BJ's Restaurants, Inc. Quote
For revenues, the consensus mark is pegged at nearly $325.4 million, suggesting an increase of 4.5% from the prior-year quarter’s figure.
Let's check out the factors, which are likely to have influenced the quarter.
Key Factors to Note
Revenues
BJ's Restaurants’ fiscal third-quarter revenues are expected to have increased year over year, attributable to consistent restaurant expansion plans and investments in remodeling initiatives, accompanied by re-staffing and labor retention initiatives. Also, menu innovation strategies and menu pricing add to the growth trend.
In the last quarter’s earnings call, the company stated that it has expanded its remodeling initiative to about 35-40 restaurants for fiscal 2023, which is above its original plan of approximately 30 remodels. This expansion was backed by encouraging guest traffic and restaurant profit that BJRI witnessed from its already remodeled restaurants. As of the last quarter, more than 20 remodels have been completed.
For the fiscal third quarter, the average weekly sales of BJRI are quite likely to have been driven by remodeling and staffing initiatives along with strategic menu pricing. For the quarter, our model predicts average weekly restaurant sales to be up 3.7% year over year.
Considering the above-mentioned tailwinds, we predict comparable restaurant sales to grow 3.9% year over year.
Margins
Although the ongoing inflationary environment and economic uncertainty are primary concerns, BJ's Restaurants is still likely to witness margin and earnings growth on a year-over-year basis. The company’s customer-focus initiatives, along with cost-saving and labor strategies, are likely to have helped maintain the growth trend in the current economic scenario.
For the quarter, the company expects labor inflation to be in mid-single-digits for the to-be-reported quarter. That said, the company’s cost-saving efforts are likely to have aided margin improvement.
For the quarter, we expect total cost and expenses to increase 3.9% to $328.8 million compared with the prior-year’s reported increase of 9.5% to $316.5 million. Moreover, gross and adjusted EBITDA margins are expected to rise 12.5% and 6.7% year over year.
We also predict restaurant-level operating margin to expand to 12.5% from 10.3%, year over year.
What Our Model Indicates
Our proven model does not conclusively predict an earnings beat for BJ's Restaurants this time around. The company does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat.
Earnings ESP: The Earnings ESP for BJRI is -308.33%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: BJRI currently carries a Zacks Rank of 3.
Stocks Poised to Beat on Earnings
Here are some stocks from the Zacks Retail-Wholesale sector, which according to our model, have the right combination of elements to post an earnings beat.
The Wendy's Company WEN has an Earnings ESP of +5.32% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
WEN’s earnings for the to-be-reported quarter are expected to increase 8.3%. The company reported better-than-expected earnings in the trailing four quarters, the average surprise being 4.8%.
McDonald's Corporation MCD has an Earnings ESP of +1.11% and a Zacks Rank of 3.
MCD is expected to register 11.6% growth in earnings for the to-be-reported quarter. Notably, the company reported better-than-expected earnings in all the last four quarters, the average surprise being 9.5%.
Restaurant Brands International Inc. QSR has an Earnings ESP of +0.51% and a Zacks Rank of 3.
QSR’s earnings for the to-be-reported quarter are expected to decline 11.5%. The company reported better-than-expected earnings in three of the trailing four quarters and was in line on the remaining one occasion, the average surprise being 12.7%.
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BJ's Restaurants, Inc. (BJRI) : Free Stock Analysis Report
McDonald's Corporation (MCD) : Free Stock Analysis Report
The Wendy's Company (WEN) : Free Stock Analysis Report
Restaurant Brands International Inc. (QSR) : Free Stock Analysis Report
