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Benchmark has reiterated its Buy rating on shares of BJ's Restaurants (NASDAQ: NASDAQ:BJRI), following a meeting with the company's senior management team.
The meeting included discussions on recent executive changes, strategies for brand growth, and consumer value offerings.
The encounter took place in Huntington Beach, CA, with Interim CEO Brad Richmond and CFO Tom Houdek, where they elaborated on the company's direction and growth potential. Benchmark noted the company's plans to expand BJ's brand into a 425+-unit opportunity in the U.S.
The analyst highlighted the importance of understanding the steps that BJRI's management and board are taking to position the brand for future growth. Despite the positive outlook, the firm has decided to maintain a Hold rating on BJRI shares as it awaits further details on the company's growth strategies.
During the meeting, the focus was on the rationale behind recent senior management changes and how these could contribute to better positioning BJ's Restaurants for expansion. Additionally, there was a broader discussion on consumer trends, particularly the increasing demand for value from BJRI's customer base.
In other recent news, BJ's Restaurants has seen a series of leadership changes and financial developments. The company announced the appointment of Lyle D. Tick as President and Chief Concept Officer, as well as C. Bradford Richmond as Interim Chief Executive Officer.
Both bring extensive industry experience to their new roles, with Tick's strategic customer focus expected to enhance brand awareness and Richmond's operational expertise anticipated to drive sustainable sales growth.
In terms of financial performance, BJ's Restaurants reported Q2 fiscal year 2024 results with total sales of $349.9 million and a slight 0.6% decrease in same-store sales. The company's revenue surpassed consensus estimates by $1 million, reaching $350 million, and the adjusted operating earnings per share were $0.53, beating the consensus prediction of $0.51. The adjusted EBITDA exceeded expectations, totaling $36 million against a consensus of $33 million.
Following these results, a Benchmark analyst downgraded the company's stock from Buy to Hold, citing more conservative estimates for fiscal years 2024 and 2025. Despite the downgrade, the company announced plans to open two new restaurants and repurchased approximately 255,000 shares of common stock for $8.8 million.
Looking ahead, BJ's Restaurants projects Q3 comparable sales to be in the 1% to 2% range and expects margin expansion in Q4, despite anticipated increases in marketing and food costs.
InvestingPro Insights
To complement Benchmark's analysis of BJ's Restaurants (NASDAQ: BJRI), recent data from InvestingPro offers additional context to the company's financial position and market performance. As of the last twelve months ending Q2 2024, BJRI reported revenue of $1.33 billion, with a slight quarterly revenue growth of 0.07% in Q2 2024. This aligns with the company's discussions on brand growth strategies mentioned in the meeting with Benchmark analysts.
InvestingPro Tips highlight that BJRI is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.42 as of the last twelve months ending Q2 2024. This could be seen as a positive indicator for investors considering the company's expansion plans for 425+ units in the U.S. Additionally, BJRI has shown a high return over the last year, with a one-year price total return of 53.17% as of the latest data.
However, it's worth noting that BJRI suffers from weak gross profit margins, which stood at 14.21% for the last twelve months ending Q2 2024. This may be a factor in the company's focus on consumer value offerings, as discussed in the meeting with Benchmark.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for BJRI, providing a deeper understanding of the company's financial health and market position.
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