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Daily Alert - 6/22/20

Our second recommendation is a sale of a restaurant company that will be slow to recover from the pandemic.

Sell: BJ’s Restaurants, Inc. (BJRI)
From SmallCap Informer
Updated from Wall Street’s Best Investments 820, August 7, 2019

BJ’s Restaurants reported financial results for its 2020 first quarter ended Tuesday, March 31, 2020. As expected, total revenues decreased 12.4% to $254.6 million, even though total restaurant operating weeks increased approximately 3.2%, Same-restaurant sales declined 15.5% for the whole quarter, though same-store sales had been on an uptrend for the first eight weeks of the quarter, increasing 1.5%. Comparable restaurant sales for the last five weeks of the quarter declined 40.4%. The company posted a per-share loss of $0.22 in the quarter.

By early May, BJ’s reported that a quarter of its restaurants had reopened, and noted that its larger dining rooms gave it more flexibility to accommodate social distancing regulations. Off-premise sales were promoted via changes in its mobile app, along with menu changes to feature offerings for families and parties.

BJ’s closed on a $70 million common stock sale and has $134 million of cash and cash equivalents on hand. The company remains optimistic that it will be able to grow the number of restaurants from 209 to 425 over the next years.

In our earnings model, we are concerned that BJ’s may not see its EPS return to 2019 level ($2.20) for a very long time. Analysts expect a loss of $1.53 for FY 2020 and EPS of $1.22 in FY 2021. While BJ’s may be better positioned than some casual dining establishments to weather the COVID-19 storm, recovery may take too long to justify remaining invested in its stock right now. As a result, BJ’s Restaurants is being discontinued from coverage.

Doug Gerlach,, 1-877-33-ICLUB, June 2020