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BJ's Restaurants (BJRI) Stock Down Despite Q2 Earnings Beat

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BJ's Restaurants, Inc. BJRI reported second-quarter fiscal 2021 results, with earnings and revenues beating the Zacks Consensus Estimate as well as increasing on a year-over-year basis.

Despite solid fiscal second-quarter results, shares of the company fell 4.9% during after-hours trading session on Jul 29. Negative investor sentiments were witnessed as the company sales failed to reach pre- pandemic levels during the quarter. During fiscal second quarter, comparable restaurant sales were down by approximately 6% compared with 2019 levels.

Management stated that it witnessed sequential improvements in terms of comparable restaurant sales. Comps as of April, May and June 2021 came in at (7.6%), (7.6%) and (3.8%) compared with 2019 levels. Furthermore, the momentum continued into July with comps growth reported at 1.6% compared with 2019 levels.

Greg Levin, president and chief financial officer, BJ's Restaurants, stated, “Absent any reinstatement of COVID restrictions, we believe our positive sales momentum will continue in the second half of this year even as we manage through the current industry challenges around labor, inflation and supply chain.”

Earnings & Revenues

BJs Restaurants, Inc. Price, Consensus and EPS Surprise

BJs Restaurants, Inc. Price, Consensus and EPS Surprise
BJs Restaurants, Inc. Price, Consensus and EPS Surprise

BJs Restaurants, Inc. price-consensus-eps-surprise-chart | BJs Restaurants, Inc. Quote

In the quarter under review, adjusted earnings per share came in at 26 cents that beat the Zacks Consensus Estimate of 16 cents by 62.5%. In the prior-year quarter, the company had reported adjusted loss of 99 cents per share.

During fiscal second quarter, total revenues of $290.3 million surpassed the Zacks Consensus Estimate of $285 million by 1.9%. Also, the top line surged 126.7% on a year-over-year basis. The upside was primarily attributed to the lifting of capacity and social distancing restrictions, thereby resulting in enhanced dining room capacity. Also, the company benefitted from solid off-premise sales, which is more than double of pre-COVID levels.

Comparable restaurant sales during fiscal second quarter surged 121.9% against 57.2% plunge in the year-ago quarter’s levels.

Expenses & Operating Margins

During the fiscal second quarter, labor costs, as a percentage of sales, came in at 35.9%, down 430 basis points (bps) year over year. Occupancy and operating costs (as a percentage of sales) came in at 23.3% compared with 35.8% in the year-ago quarter. General and administrative expenses (as a percentage of sales) nosedived 540 bps year over year to 5.9% in the quarter.

Restaurant-level operating margin came in at 14.8% against (1%) reported in the year-ago quarter.

Store Count

As of Jun 29, 2021, BJ’s Restaurants owned and operated 212 casual dining restaurants (in 29 states), out of which, one is temporarily closed due to the COVID-19 crisis. During the fiscal second quarter, the company opened new restaurants in Merrillville, Indiana and Lansing, MI. Meanwhile, the company stated its intention to re-open its restaurant in Richmond, VA over the next month.

Going forward, the company plans to open eight to ten restaurants in fiscal 2022. It remains steadfast in its commitment to expand presence to at least 425 restaurants domestically.

Balance Sheet

As of Jun 29, 2021, cash and cash equivalents totaled $88 million compared with $90.7 million on Mar 30, 2021. Total debt as of Jun 29, 2021, came in at $81.8 million compared with $116.8 in the previous fiscal quarter.

Zacks Rank & Other Key Picks

BJ's Restaurants currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Some other top-ranked stocks in the same space include Cracker Barrel Old Country Store, Inc. CBRL, Ruth's Hospitality Group, Inc. RUTH and Papa John's International, Inc. PZZA. Cracker Barrel and Ruth's Hospitality sport a Zacks Rank #1, while Papa John's carries a Zacks Rank #2.

2021 earnings for Cracker Barrel and Ruth's Hospitality are expected to surge 163.7%, and 381.6%, respectively.

Papa John's has three-five-year earnings per share growth rate of 15%.


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