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BJ's Restaurants (BJRI) Shares Down on Earnings Miss in Q2

Zacks Equity Research

BJ’s Restaurants, Inc. BJRI reported mixed results for the second quarter of 2019, wherein earnings missed the Zacks Consensus Estimate while revenues surpassed the same. With this, the company’s top line surpassed estimates for seven straight quarters while the bottom line exceeded it in five of the trailing seven quarters.

Adjusted earnings of 68 cents missed the Zacks Consensus Estimate for earnings of 74 cents by 8.1%. The bottom line also decreased 13.9% year over year.

BJ’s Restaurants’ earnings in the quarter suffered from pressures of inflationary costs and bad weather conditions. Labor costs and expenses related to the development of the company’s off-premise sales have further added to the woes.

Earnings miss and declining profits may have made investors apprehensive as BJ’s Restaurants’ shares moved down nearly 6% in the after-hours trading on Jul 25. Also, the company’s shares have lost 23.4% so far this year against the industry’s 26.5% rally.

 

Revenues & Comps

Total quarterly revenues were $301.1 million, which surpassed the consensus estimate of $300 million by 0.3%. The top line also grew 4.7% year over year, driven by increased comps and 2.6% rise in operating weeks.

Comparable restaurant sales in the quarter under review increased 2%. This uptick was driven by 3% increase in average check, partially offset by a 1% decline in traffic. The company stated that robust sales-building efforts and marketing efficiency will continue to drive comps in the quarters to come.

Notably, comps growth in the reported quarter was lower than 4.2% increase recorded in the first quarter of 2019 and compared unfavorably with 5.6% rise in the year-ago quarter.

Expenses & Operating Margins

Labor costs, as a percentage of sales, increased 50 basis points (bps) to 36% in the second quarter while occupancy and operating costs (as a percentage of sales) were 21.4%, up 90 bps year over year.

Restaurant-level operating margin was 17%, down 200 bps from the year-ago quarter number. However, 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. price-consensus-eps-surprise-chart | BJ's Restaurants, Inc. Quote

Balance Sheet

As of Jul 2, 2019, cash and cash equivalents totaled $23.4 million compared with $29.2 million as of Jan 1, 2019.

Total debt increased to $100 million at the end of the second quarter from $95 million at 2018 end.

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

Additionally, in the quarter under review, the company repurchased and retired roughly 422,000 shares of its common stock for $19.2 million.

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.

Darden DRI reported fourth-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate, whereas revenues lagged the same. Adjusted earnings of $1.76 per share beat the Zacks Consensus Estimate of $1.73. Moreover, the bottom line increased 26.6% year over year on higher revenues.

Domino’s DPZ reported mixed second-quarter 2019 financial numbers, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Adjusted earnings were $2.19 per share, which outpaced the Zacks Consensus Estimate of $2.00. The metric also increased 19% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.

Chipotle CMG reported better-than-expected results in the second quarter of 2019. Its adjusted earnings of $3.99 per share surpassed the Zacks Consensus Estimate of $3.69 by 8.1%. The bottom line also grew 39% from the year-ago quarter, backed by increased revenues and strong operating margins.

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