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Why Is BJ's Restaurants (BJRI) Up 16% Since Last Earnings Report?

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  • BJRI

A month has gone by since the last earnings report for BJ's Restaurants (BJRI). Shares have added about 16% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is BJ's Restaurants due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

BJ's Restaurants Posts In-Line Q4 Earnings, Revenues Top

BJ's Restaurants reported fourth-quarter fiscal 2020 results, wherein earnings matched the Zacks Consensus Estimate, while revenues surpassed the same. Notably, the top line outpaced the consensus mark for the third straight quarter.

Earnings & Revenues

Adjusted net loss of 80 cents per share was in line with the Zacks Consensus Estimate. In the year-ago period, the company had reported adjusted earnings of 56 cents per share.

Total quarterly revenues of $197 million beat the consensus estimate of $196.8 million by 0.12%. However, the top line declined 32.3% on a year-over-year basis. Lower comparable restaurant sales led to the decline. However, total restaurant operating weeks increased approximately 0.6% from the prior-year quarter. Comparable restaurant sales slumped 32.3% against a gain of 0.4% in the year-ago quarter.

Expenses & Operating Margins

During the fiscal fourth quarter, labor costs, as a percentage of sales, came in at 38.4%, up 200 basis points (bps) year over year. Occupancy and operating costs (as a percentage of sales) were 29.1% compared with 22.5% in the year-ago quarter. General and administrative expenses (as a percentage of sales) increased 150 bps to 6.8% in the quarter.

Restaurant-level operating margin came in at 6.6% compared with 16% in the year-ago quarter.

Store Count

As of Dec 29, 2020, BJ’s Restaurants owned and operated 210 casual dining restaurants (in 29 states), out of which one is temporarily closed due to the COVID-19 crisis. The company is planning to expand presence to at least 425 restaurants.

Balance Sheet

As of Dec 29, 2020, cash and cash equivalents totaled $50 million compared with $22.4 million on Dec 31, 2019. Total debt as of Dec 29, 2020 amounted to $116.8 million compared with $143 million at 2019-end.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -16.87% due to these changes.

VGM Scores

Currently, BJ's Restaurants has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, BJ's Restaurants has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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