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A month has gone by since the last earnings report for BJ's Restaurants, Inc. BJRI. Shares have added about 10.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is BJRI 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 drivers.
BJ’s Restaurants Q4 Earnings & Revenues Top Estimates
BJ’s Restaurants reported better-than-expected earnings and revenues in fourth-quarter 2017 results.
Adjusted earnings of 37 cents per share surpassed the Zacks Consensus Estimate of 32 cents by 15.6%. The bottom line, however, fell 32.7% year over year due to higher costs.
Quarterly revenues of $261.1 million topped the consensus estimate of $259.78 million by 0.5%, but decreased 1.7% from the prior-year quarter, primarily due to one less operating week.
Adjusting for the one extra week in 2016, net revenues for the fourth quarter of 2017 grew 6.9% year over year. The revenue growth was attributable to comps growth and increased traffic.
The company’s differentiated sales-driving efforts have reflected in the top-line performance. BJ’s high quality slow-roasted menu has been favoring growth in foot traffic while daily Brewhouse Specials have contributed to mid-week sales growth.
However, cost pressures have affected the company’s margins and somewhat dented the bottom line.
Comps, Expenses & Operating Margins
Comps in the quarter grew 1.6%, comparing favorably with the prior-quarter’s decrease of 1.7% and year-ago quarter’s decline of 2.2%. The comps grew on strong traffic gains of 0.7% in the quarter.
Labor costs, as a percentage of sales, increased 90 basis points (bps) in the quarter to 35.8% whereas, operating costs were 21.4% of net sales, up 70 bps year over year.
Restaurant-level margin was 16.7%, down 200 bps from the year-ago quarter. Moreover, operating margin decreased 210 bps to 4.2%.
In order to counter high costs prevalent in the industry, the company is undertaking various cost savings and efficiency initiatives that would eventually drive margins.
Balance Sheet
As of Jan 2, 2018, cash and cash equivalents totaled $24.3 million, compared with $22.8 million as of Jan 3, 2017.
Total debt increased to $163.5 million at the end of fourth-quarter 2017, from $148 million at the end of fourth-quarter 2016.
During the fourth quarter, the company repurchased approximately 0.3 million shares of its common stock at a cost of approximately $9.6 million.