U.S. markets closed

Earnings Beat: BJ's Restaurants, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Simply Wall St

Last week, you might have seen that BJ's Restaurants, Inc. (NASDAQ:BJRI) released its full-year result to the market. The early response was not positive, with shares down 7.7% to US$38.82 in the past week. Revenues were US$1.2b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$2.20 were also better than expected, beating analyst predictions by 15%. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.

View our latest analysis for BJ's Restaurants

NasdaqGS:BJRI Past and Future Earnings, February 22nd 2020

Following the latest results, BJ's Restaurants's 14 analysts are now forecasting revenues of US$1.23b in 2020. This would be a satisfactory 5.5% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to decline 16% to US$1.88 in the same period. Before this earnings report, analysts had been forecasting revenues of US$1.23b and earnings per share (EPS) of US$1.94 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share forecasts for next year.

The consensus price target held steady at US$43.31, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic BJ's Restaurants analyst has a price target of US$52.00 per share, while the most pessimistic values it at US$35.00. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Next year brings more of the same, according to analysts, with revenue forecast to grow 5.5%, in line with its 6.3% annual growth over the past five years. Compare this with the wider market (in aggregate), which analyst estimates suggest will see revenues fall 8.2% next year. So although BJ's Restaurants is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that BJ's Restaurants's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$43.31, with the latest estimates not enough to have an impact on analysts' estimated valuations.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for BJ's Restaurants going out to 2022, and you can see them free on our platform here.

It might also be worth considering whether BJ's Restaurants's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.