- By GF Value
The stock of BJ's Restaurants (NAS:BJRI, 30-year Financials) is estimated to be significantly overvalued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $59.63 per share and the market cap of $1.4 billion, BJ's Restaurants stock is believed to be significantly overvalued. GF Value for BJ's Restaurants is shown in the chart below.
Because BJ's Restaurants is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth, which is estimated to grow 0.61% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid permanent capital loss, an investor must do their research and review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are a great way to to understand its financial strength. BJ's Restaurants has a cash-to-debt ratio of 0.09, which which ranks worse than 81% of the companies in Restaurants industry. The overall financial strength of BJ's Restaurants is 3 out of 10, which indicates that the financial strength of BJ's Restaurants is poor. This is the debt and cash of BJ's Restaurants over the past years:
It is less risky to invest in profitable companies, especially those with consistent profitability over long term. A company with high profit margins is usually a safer investment than those with low profit margins. BJ's Restaurants has been profitable 9 over the past 10 years. Over the past twelve months, the company had a revenue of $778.5 million and loss of $2.71 a share. Its operating margin is -8.90%, which ranks in the middle range of the companies in Restaurants industry. Overall, the profitability of BJ's Restaurants is ranked 6 out of 10, which indicates fair profitability. This is the revenue and net income of BJ's Restaurants over the past years: