BJ’s Restaurant (NASDAQ: ) stock ratings changed on Friday, with Benchmark analysts moving their rating from “buy” to “hold.” The decision comes after the company reported second-quarter fiscal 2024 results, which showed slightly beating consensus estimates.
The restaurant chain’s revenue of $350 million topped consensus estimates by $1 million. This revenue was reported despite a slight decline in same-store sales (SSS) of 0.6%. Additionally, adjusted operating earnings per share (EPS) were $0.53, compared with the consensus estimate of $0.51.
The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also beat expectations, reaching $36 million, compared with the consensus estimate of $33 million.
Despite positive results for revenue, earnings per share and EBITDA, the downgrade reflects BJ’s Restaurants’ cautious approach to the fiscal year ahead. The analyst pointed to more conservative estimates for fiscal 2024 and 2025 as a key reason for the rating change. In addition, the rating downgrade is also affected by the challenges posed by the current operating environment, which will face difficulties in the short term.
BJ’s Restaurant’s second-quarter results were slightly better than market expectations after adjusting for certain offline items, including a $0.19 adjustment. The company was able to achieve these results despite a modest decline in same-store sales, demonstrating a resilient operating strategy.
BJ’s Restaurant investors and stakeholders are now watching to see how the company responds to the forecasted conservative financial environment and operating difficulties highlighted in analyst reports.
A move from a “Buy” rating to a “Hold” rating signals a shift to neutral stance on the company’s shares, suggesting analysts currently don’t see significant upside or downside potential in the near term.
In other recent news, BJ’s Dining Inc. reported a slight decrease in comparable sales in the second quarter of fiscal 2024, but a significant increase in restaurant margins and adjusted EBITDA. Sales reached $349.9 million. This is thanks to BJ’s Restaurants’ focus on improving guest experience and efficiency improvements, as well as its stock repurchase program.
Restaurant profit margin increased to 15.5%, an increase of 100 basis points compared with the same period last year. Adjusted EBITDA also grew 13% to $36.1 million. The company announced plans to open two new restaurants with new prototypes and repurchased approximately 255,000 shares of common stock for $8.8 million.
Looking ahead, BJ’s Restaurant expects third-quarter comparable sales to be in the 1% to 2% range. The company expects margins to expand in the fourth quarter, despite expected increases in marketing and food costs. The company’s outlook includes targeting 8-10% revenue growth from new units and low-to-mid single-digit comparable restaurant sales.
Investment Professional Insights
Following the recent analyst rating changes for BJ’s Restaurant (NASDAQ: BJRI ), it’s insightful to take a look at some of the key indicators and tips provided by InvestingPro. The company has been trading at a high price-to-earnings ratio, with a price-to-earnings ratio of 36.63, indicating investors have high expectations for future profit growth. However, this valuation becomes even more attractive when factoring in the trailing 12-month adjusted price-to-earnings ratio through Q1 2024 (a lower 29.64). This could be a sign that the company may be undervalued relative to its recent earnings growth, a factor that could be of interest to value-oriented investors.
In addition, Beijing Catering has increased its dividend for three consecutive years, reflecting its commitment to shareholder return value and demonstrating its confidence in its financial position and future prospects. Despite the challenging operating environment, InvestingPro Tips also revealed that analysts predict the company will be profitable this year, which is consistent with the company’s profits over the past 12 months. The company’s revenue grew 0.21% in the trailing 12 months to Q1 2024, further underscoring the company’s resilience and showing its ability to grow despite market headwinds.
For those who wish to delve deeper into BJ’s Restaurant’s financial health and future prospects, InvestingPro provides additional tips to help make more informed investment decisions. There are also 10 InvestingPro tips available, which can be accessed by visiting https://www.investing.com/pro/BJRI. To enhance your investing strategy, use the coupon code PRONEWS24 Enjoy up to 10% discount on annual Pro and Pro+ annual or two-year subscriptions.
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