Shares of BJ's Restaurants (NASDAQ:BJRI) were surging today as the casual-dining chain topped muted expectations in its third-quarter earnings report. Though profits fell, the performance was enough to please Wall Street, since the stock had already fallen significantly over the past year. Shares were up 15.3% as of 12:37 p.m. EDT.
BJ's said comparable sales in the quarter slipped 0.3% as the company lapped a surge that came from its new Slow Roasted Menu and increased delivery as it embraced third-party delivery apps. Management also noted that the casual-dining industry had seen a broader pullback in sales. Overall revenue increased 3.1% to $278.7 million, which narrowly beat estimates at $278 million, as the company plans to add seven new restaurants this year.
On the bottom line, net income fell sharply from $8.5 million to $3.7 million as costs for labor and occupancy rose faster than sales. Earnings per share came in at $0.18, down from $0.39 a year ago, but that was still much better than the analyst consensus at $0.10.
CEO Greg Trojan noted the challenging environment and the impact of Hurricane Dorian, which affected 10% of the company's restaurants, but was positive about the company's long-term position, saying, "Our newest restaurants continue to exceed sales and profitability expectations as their weekly sales average outperformed our comparable restaurant sales for the quarter," and, "During the quarter we continued making important investments in the business focused on building future sales and improving our already strong operations-based culture."
BJ's doesn't issue guidance, but the company's growth plans remain on track, as it plans to accelerate new restaurant openings next year to 8 to 10. It also raised its dividend by 8% to $0.13 a quarter, a sign of confidence in bottom-line growth. Given that the stock had fallen close to 50% over the last year coming into the report, the earnings beat and positive signs about the company's growth were enough to satisfy the market.