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BJ's Restaurants (BJRI) Down on Q3 Earnings & Revenue Miss

Shares of BJ’s Restaurants, Inc. BJRI lost more than 2% in afterhours trading on Oct 26, after the company reported lower-than-expected results for third-quarter fiscal 2017.

Earnings and Revenue Discussion

Adjusted earnings of 15 cents per share missed the Zacks Consensus Estimate of 24 cents by 37.5%. Moreover, earnings declined 50% from the year-ago figure of 30 cents, primarily due to increased expenses and adverse effects of the recent hurricanes — Harvey and Irma.

Revenues of $247.0 million were up 5.7% year over year owing to an increase in total operating weeks. However, revenues missed the consensus mark of $248.6 million by 0.7%.

Inside the Headline Numbers

Comps in the quarter dropped 1.7%, wider than the prior quarter’s decrease of 1.4% but narrower than the year-ago decline of 3.4%.

Notably, hurricane Irma impacted comps in September. Excluding these effects, comps were up 1% in the month with guest counts remaining flat. Meanwhile, so far in October, the company has witnessed comps growth of around 2%.

In fact, the recent positive sales trend partly reflects the success of the company’s initiatives focused onoff-premise sales, Daily Brewhouse Specials and other value offerings Additionally, BJ’s Restaurants’ slow roasted menu items continues to perfrom well

However, restaurant level margin was 14.2%, down 350 basis points (bps) year over year. Moreover, operating margin decreased 330 bps to 0.6%.
Nevertheless, the company is focused on improving its financial returns and enhancing share holders’ value.

Restaurant Openings

BJ’s Restaurants opened eight restaurants by the end of fiscal third quarter. The company has scheduled the opening of the remaining two restaurants in Bowie, MD, and Taylor, MI, in the fourth quarter. This will help the company achieve its goal of opening 10 new restaurants in fiscal 2017.

In fact, in fiscal 2018, the company plans to open four to six restaurants as compared with 10 in the current year.

Meanwhile, BJ’s Restaurants carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

McDonald's Corp. MCD reported third-quarter adjusted earnings per share of $1.76, beating the Zacks Consensus Estimate of $1.75 by 0.6%. Earnings also increased 9% year over year.

Chipotle Mexican Grill, Inc.’s CMG third-quarter 2017 adjusted earnings of $1.33 per share lagged the Zacks Consensus Estimate of $1.56 by 14.7%. However, the figure increased significantly from the prior-year quarter earnings of 79 cents.

Domino's Pizza, Inc.’s DPZ third-quarter 2017 adjusted earnings of $1.27 per share outpaced the Zacks Consensus Estimate of $1.12 by 4.1%. Further, the bottom line surged 32.3% year over year on the back of higher revenues and lower share count.

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