We expect BJ's Restaurants, Inc. BJRI to beat expectations when it reports first quarter 2015 results on Apr 23, after the markets close. Last quarter, the company posted a positive earnings surprise of 47.62%. In-fact, the company has beaten earnings estimates in all the trailing four quarters with an average positive earnings surprise of 45.72%. Let's see what is in store this quarter.
Why a Likely Positive Surprise?
Our proven model shows that BJ's Restaurants is likely to beat earnings because it has the right combination of two key components.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +3.57%. This is meaningful and a leading indicator of a likely earnings surprise.
Zacks Rank: BJ's Restaurants has a Zacks Rank #2 (Buy). Note that stocks with Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings. Meanwhile, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of BJ's Restaurants’ Zacks Rank #2 and +3.57% ESP makes us confident of an earnings beat.
What's Driving the Better-Than-Expected Earnings?
With a unique position in the commoditized hyper-competitive bar and grill segment, BJ’s Restaurants is well-poised to sustain its growth momentum due to improved operating efficiencies and innovative offerings. Moreover, the company has been streamlining its menu in order to improve traffic. The company is offering seasonal beers and several new appetizers, which should further improve traffic. Moreover, the company’s Project Q initiative that is focused on improving kitchen productivity is helping to reduce kitchen complexity and simplify and improve recipes, thereby enhancing the overall consistency and quality of its menu.
Its guest loyalty program, catering program, establishment of a centralized call center to capture more online orders, mobile ordering and payment and focus on supply chain management sets it up nicely for another quarter of earnings beat.
BJ's Restaurants is committed to improving its operating margins through cost containment initiatives. Besides boosting the top line, the company’s Project Q initiative is helping it to curtail costs as well as it has reduced average kitchen hours leading to labor efficiencies. These sales and costs saving initiatives are expected to generate profits in the upcoming quarters.
Other Stocks to Consider
BJ's Restaurants is not the only firm looking up this earnings season. We also anticipate earnings beat from three other companies in the restaurant industry:
Sonic Corp. SONC has an Earnings ESP of +2.78% and a Zacks Rank #1 (Strong Buy).
Jack in the Box Inc. JACK has an Earnings ESP of +3.03% and a Zacks Rank #2.
The Habit Restaurants, Inc. HABT has an Earnings ESP of +20.00% and a Zacks Rank #2.
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