Why BJ's Resturants Shares Floundered

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Investors were spitting out shares of BJ's Restaurants (Nasdaq: BJRI  ) today, as the stock fell as much as 19%, after a poor earnings report.

So what: The stock hit its lowest point in two years today, as it received two ratings downgrades after posting an EPS of just $0.24, on expectations of $0.28. Revenue grew 16% to $175.2 million, but also fell below estimates. The miss seems to indicate slowing growth and reflects an industry trend, as a number of other restaurants have delivered disappointing results. Same-store sales increased just 2.3%, as management blamed "very challenging headwinds in the casual dining segment during the quarter."

Now what: With net income increasing just 8% in the quarter, this growth story may be petering out. BJ's managed to open four new restaurants in the quarter, increasing its store base by about 3%, but the sluggish same-store sales indicate that growth may continue to be slow. With a P/E around 27 and no apparent competitive advantage, I see little reason to invest.

Want to get seconds on BJ's? Just add BJ's Restaurants to your Watchlist.


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  • Report this Comment On October 27, 2012, at 6:22 PM, dabyrdman wrote:

    Well just like that, right after a recommendation to buy the stock, we are already told that the stock is not worth investing in? What kind of service are you providing when you tell us to hold for the long-term and within a couple weeks the same stock pitched is already said to be a poor investment choice?

  • Report this Comment On October 29, 2012, at 5:51 PM, eyeinthesky92 wrote:

    I second the above comment. the whole retail economy is slowing.

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