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Why You Should Add BJ’s Restaurants (BJRI) to Your Portfolio

Zacks

BJ's Restaurants, Inc. BJRI is currently one of the top-performing stocks in the restaurant space. This is quite evident from an improvement in its share price and strong fundamentals.

Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio now.

Why an Attractive Pick?

Price Performance: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourse in the past six months. BJ's Restaurants has returned 50.9%, which compares favorably with the industry’s gain of just 1.9%.


The price surge can be attributable to solid investor’s optimism surrounding the stock, given the company’s various strategic sales-building initiatives that are likely to boost the top-line performance in the upcoming quarters. Firstly, it has installed slow roasting ovens in all its restaurants to strengthen and diversify its menu offerings. Secondly, the company has rolled out server hand-held ordering tablets across all its restaurants to improve order times and increase average checks. Just two quarters into these roll outs, the initial results have been encouraging.

Solid Rank & VGM Score: BJ's Restaurants has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.

Northward Estimate Revisions: Seven estimates for 2018 moved north over the past 30 days versus no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for 2018 climbed 5.9%.

Moving ahead, we expect that the company’s continued cost control and efficiency initiatives in the areas of sourcing, distribution, supplies and maintenance might give a boost to the bottom line.

Strong Growth Prospects: Arguably, earnings growth is of utmost importance for determining a stock’s potential as surging profit levels often indicate solid prospects (and stock price gains). The Zacks Consensus Estimate for 2018 earnings of $1.79 reflects a year-over-year improvement of 27%. Also, the stock has long-term earnings growth rate of 15.3%.

Notably, this strong earnings growth prospect is justified, given BJ's Restaurants’ continuous focus on streamlining menu pricing, menu design and cost saving initiatives.

Wyndham Worldwide Corp Net Income (TTM)

Zacks Rank and Other Stocks to Consider

BJ's Restaurants carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other stocks worth considering from the same space are Domino's Pizza DPZ, Sonic Corp. SONC and Carrols Restaurant TAST, each carrying the same bullish rank as BJ's Restaurants.

Long-term earnings per share growth rate for Domino's, Sonic Corp. and Carrols Restaurant's is projected at 15.2%, 14.7% and 20%, respectively.

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