BJ’s Restaurants Shares Drop Despite 3Q Revenue Beat

Shares of BJ’s Restaurants declined 2.3% in the extended trading session on Thursday despite the company posting better-than-expected results for the third quarter.

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BJ’s Restaurants’ (BJRI) revenue declined 28.6% Y/Y to $198.9 million as the COVID-19 pandemic impacted the company’s ability to operate. However, 3Q revenue beat analysts’ estimate of about $183 million and improved from 2Q when revenue declined 57.5%.

The company posted net loss per share of $0.30 in 3Q20 compared to EPS of $0.18 in 3Q19. Excluding the impact of one-time gains, the company’s adjusted loss per share came in at $0.44 and surpassed analysts’ estimate of loss per share of $0.71.

Also, 3Q comparable sales fell 30.2%. At the beginning of the third quarter, the casual dining restaurant chain had less than 70% of its restaurant dining rooms open and was subject to indoor seating capacity limitations. With take-out and delivery services, temporary outdoor patios and reopening of certain dining rooms, the company’s weekly sales average improved from the mid $60,000 range per restaurant in July to about $80,000 per restaurant in the last weeks of September.

The company disclosed that sales momentum continued in October, with weekly sales per restaurant currently averaging in the low $80,000 range. The company currently has 87% of its dining rooms open, but in limited capacities. (See BJRI stock analysis on TipRanks)

BJ’s Restaurants CEO Greg Trojan commented, “We remain committed to our long term national expansion plan to operate at least 425 BJ’s restaurants while continuing to balance new restaurant growth and overall quality and hospitality. While we are currently in the process of finalizing our 2021 business plan, we expect to announce a modest increase in the number of planned new restaurant openings for next year.”

Ahead of the quarterly results, Barclays analyst Jeffrey Bernstein increased the price target on BJRI to $24 from $18, while maintaining a Hold rating.

Shares have declined 9.8% year-to-date and the average analyst price target of $29.85 indicates further downside of 12.7% in the months ahead. Currently, the Street’s Moderate Buy consensus is based on 6 Buys versus 7 Holds and 1 Sell.