It has been about a month since the last earnings report for BJ's Restaurants (BJRI). Shares have added about 5% 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 its most recent earnings report in order to get a better handle on the important catalysts.
BJ's Restaurants Q3 Earnings Beat Estimates, Fall Y/Y
BJ's Restaurants reported third-quarter fiscal 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. However, the metrics declined on a year-over-year basis.
Earnings & Revenues
Adjusted net loss of 44 cents per share was narrower than the Zacks Consensus Estimate of a loss of 70 cents. In the year-ago period, the company had reported adjusted earnings of 18 cents per share.
Total quarterly revenues of $198.9 million beat the consensus estimate of $179 million by 11.1%. However, the top line declined 28.6% on a year-over-year basis. Lower comparable restaurant sales led to the decline. However, total restaurant operating weeks increased approximately 0.9% from the prior-year quarter. Comparable restaurant sales declined 30.2% compared with a 0.3% drop in the year-ago quarter.
Expenses & Operating Margins
During the fiscal third quarter, labor costs, as a percentage of sales, came in at 37.5%, flat year over year. Occupancy and operating costs (as a percentage of sales) were 28.4% compared with 23.3% in the year-ago quarter. General and administrative expenses (as a percentage of sales) increased 260 bps to 7.7% in the quarter.
Restaurant-level operating margin came in at 9.5% compared with 13.5% in the year-ago quarter.
BJ’s Restaurants reopened majority (or 87%) of its dining rooms with capacity limitations.
With respect to unit expansion, BJ's Restaurants chief executive officer, Greg Trojan stated, “We remain committed to our long term national expansion plan to operate at least 425 BJ’s restaurants while continuing to balance new restaurant growth and overall quality and hospitality.”
As of Sep 29, 2020, BJ’s Restaurants owned and operated 209 casual dining restaurants (in 29 states), out of which one is temporarily closed due to the COVID-19 crisis.
As of Sep 29, 2020, cash and cash equivalents totaled $64.9 million compared with $22.4 million on Dec 31, 2019. Total debt as of Sep 29, 2020, came in at $126.8 million compared with $143 million at 2019-end.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -136.98% due to these changes.
At this time, BJ's Restaurants has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
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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