What Happened?
Shares of american restaurant chain BJ’s Restaurants (NASDAQ: BJRI) jumped 6.7% in the afternoon session after analyst firm William Blair upgraded the stock to Outperform from Market Perform, citing expectations for strong sales momentum.
The firm noted it expected the restaurant chain to report its eighth consecutive quarter of growth in both comparable sales and customer traffic in the second quarter. Comparable sales are a key industry metric that measures revenue at locations open for at least a year. William Blair anticipated second-quarter comparable sales would exceed the consensus estimate of 2.5% and potentially reach the mid-single-digit range, which would mark the brand's strongest performance in three years.
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What Is The Market Telling Us
BJ’s shares are somewhat volatile and have had 14 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 9 months ago when the stock gained 20.4% on the news that the company reported third-quarter financial results that featured a notable profit beat and encouraging forward-looking guidance, overshadowing a slight miss on revenue.
Although total revenue of $330.2 million was up 1.4% year-on-year, it fell just short of Wall Street's forecasts. However, investors focused on the bottom line, where the company posted an adjusted profit of $0.04 per share. This marked a significant turnaround from a loss of $0.13 per share in the same period a year earlier and surpassed analysts' expectations. Furthermore, the company provided a positive outlook, raising its full-year EBITDA guidance to a midpoint of $136 million, which is above the consensus estimate of $134.5 million. This upbeat forecast likely signaled to investors that management is confident in its ability to manage costs and drive profitability, despite flattish same-store sales in the quarter.
BJ's is up 62.1% since the beginning of the year, and at $66.63 per share, it has set a new 52-week high. Investors who bought $1,000 worth of BJ’s shares 5 years ago would now be looking at an investment worth $1,624.
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