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BJ’s Restaurants (BJRI)

This restaurant beat analysts’ EPS estimates by seven cents last quarter, and 14 analysts have raised their 2016 earnings targets in the past 30 days.

BJ’s Restaurants (BJRI)
From Cabot Benjamin Graham Value Investor

BJ’s Restaurants (BJRI) is small, with only 175 restaurants in 23 states, but management’s new initiatives are beginning to achieve faster growth. Part of management’s goal is to expand the company’s number of restaurants by 10% each year. The company is adding unique items to its food offerings which are receiving enthusiastic response.

The aggressive goals are attainable because of BJ’s experienced management team, backed by the company’s strong balance sheet featuring negligible debt. To generate higher profitability, management has implemented a plan to bolster efficiency and productivity in BJ’s kitchens. The company has also been able to lower its food cost due to its increasing size and clout when ordering from vendors.

Sales and EPS will likely advance 13% during the next 12 months ending March 31, 2017. At 24.0 times current EPS and with no dividend, BJ’s stock price is a bit high, but downside risk is low. BJ’s Restaurants’ PEG ratio is below average for a restaurant business and stands at 1.34 (lower is better).

Buy BJRI at 44.71 or below. Sell when BJRI rises 51% to my sell target of 67.69 within two years.

J. Royden Ward, Cabot Benjamin Graham Value Investor,, 978-745- 5532, May 2016