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BJ's Restaurants (BJRI) Shares Down on Q4 Earnings Miss

Zacks Equity Research

BJ’s Restaurants, Inc. BJRI reported mixed results for the fourth quarter of 2018, wherein earnings missed estimates while revenues surpassed the same. With this, the top line exceeded the consensus mark for five straight quarters while the bottom line missed after outpacing estimates for five consecutive quarters.

Adjusted earnings of 49 cents missed the Zacks Consensus Estimate of 50 cents by 2%. The bottom line, however, increased 32.4% year over year on the back of improved comps and restaurant operating margins.

Earnings miss has not gone down well with investors as shares of BJ’ Restaurants declined 11.5% in the after-hours trading on Feb 21. Nonetheless, the company’s shares have gained 34.3% over the past year, outperforming the industry’s 16.2% rally.


Revenues & Comps

Total quarterly revenues were $280.5 million, which surpassed the consensus estimate of $278 million by nearly 1%. The top line also grew 7.4% year over year, driven by increased guest traffic and comps.

Comparable restaurant sales in the quarter under review increased 4.5%. The uptick was driven by a 1.1% increase in guest traffic and rise in average check. Notably, comps growth was slightly lower than 6.9% increase in the third quarter of 2018 and compared favorably with 1.6% increase in the year-ago quarter. The company stated that robust sales-building efforts and marketing efficiency will continue to drive comps in the quarters to come.

Expenses & Operating Margins

Labor costs, as a percentage of sales, decreased 40 basis points (bps) to 35.4% in the fourth quarter while occupancy and operating costs were 22%, up 60 bps year over year.

Restaurant-level operating margin was 17.2%, up 50 bps from the year-ago quarter number. In order to counter high costs prevalent in the industry, the company is undertaking various cost-saving and efficiency initiatives to drive margins.

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

 

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

Balance Sheet

As of Jan 1, 2019, cash and cash equivalents totaled $29.2 million compared with $24.3 million as of Jan 2, 2018.

Total debt increased to $95 million at the end of 2018 from $63.5 million at 2017 end.

BJ's Restaurants declared a quarterly cash dividend of 12 cents, payable on Mar 26, 2019, to shareholders of record at the close of business on Mar 12, 2019.

2018 Highlights

Adjusted earnings increased 14.5% to $2.35. Total revenues grew 8.3% to $1.1 billion in 2018. Comps also increased 5.3% in the year.

Zacks Rank & Peer Releases

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

Brinker EAT reported mixed second-quarter fiscal 2019 results, wherein earnings were in line with the Zacks Consensus Estimate but revenues surpassed the same. Adjusted earnings of 89 cents per share were in line with the Zacks Consensus Estimate and increased 2.3% on a year-over-year basis.

McDonald’s MCD reported impressive fourth-quarter 2018 results. Adjusted earnings of $1.97 per share surpassed the consensus mark of $1.90 and increased 15% from the year-ago quarter (18% in constant currencies). The upside reflects stronger operating performance.

Starbucks SBUX reported impressive first-quarter fiscal 2019 results. Adjusted earnings of 75 cents per share surpassed the Zacks Consensus Estimate of 65 cents and grew 15.4% on a year-over-year basis.

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