What Happened?
Shares of american restaurant chain BJ’s Restaurants (NASDAQ: BJRI) fell 9.8% in the pre-market session after the company reported weak third-quarter earnings. Its EBITDA and EPS missed Wall Street's estimates. Notably, the company was unable to take advantage of strong traffic growth during the quarter due to higher-than-anticipated restaurant costs. Overall, this was a weaker quarter.
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What The Market Is Telling Us
BJ’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 15.4% on the news that the company reported first-quarter results that beat analysts' same-store sales, gross margin, and EPS expectations. The results could have been better as same-store sales fell 1.7% due to heavier-than-usual winter weather in January. This affected restaurant traffic, which fell approximately 9% in January before recovering to negative mid-single digits in February and March. As these headwinds are mostly concentrated in the first quarter, management expects second-quarter comp sales to be only slightly negative due to lower pricing partly offset by improving traffic trends. The second quarter is expected to benefit from key events, including Mother's Day, Father's Day, and graduation celebrations. Zooming out, we think this was a great quarter that shareholders will appreciate.
BJ's is down 0.5% since the beginning of the year, but at $35.07 per share, it is still trading close to its 52-week high of $38.13 from March 2024. Investors who bought $1,000 worth of BJ’s shares 5 years ago would now be looking at an investment worth $867.85.
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