Should You Investigate BJ’s Restaurants, Inc. (NASDAQ:BJRI) At US$54.58?
BJ’s Restaurants, Inc. (NASDAQ:BJRI), which is in the hospitality business, and is based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NasdaqGS. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine BJ’s Restaurants’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for BJ’s Restaurants
What’s the opportunity in BJ’s Restaurants?
According to my valuation model, BJ’s Restaurants seems to be fairly priced at around 10.28% above my intrinsic value, which means if you buy BJ’s Restaurants today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $49.49, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, BJ’s Restaurants’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from BJ’s Restaurants?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -9.2% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for BJ’s Restaurants. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Currently, BJRI appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on BJRI for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on BJRI should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on BJ’s Restaurants. You can find everything you need to know about BJ’s Restaurants in the latest infographic research report. If you are no longer interested in BJ’s Restaurants, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
