BJ’s Restaurant -10%
Compare with: Powershares Food & Beverage ETF (PBJ) +28%
Investors are finding it very difficult to digest BJ’s Restaurant’s (BJRI) second straight earnings miss due to falling sales and profit margins. Besides that, the stock is very expensive, trading at 28 times forward earnings.
Third-quarter results reported on Oct. 24 revealed a 7% rise in revenues to $188.2 million in the quarter, far short of expectations for $195 million. Same-store sales dropped 2.2%. Operating income declined 61% year-over-year to $3.5 million as the operating margin fell to just 1.9%.
Blame the decline on higher labor and benefit expenses and over all higher operating costs. Heading into 2014, there’s nothing on the horizon to suggest a turnaround is in the cards for the owner and operator of BJ’s Restaurant & Brewery, BJ’s Restaurant & Brewhouse, or BJ’s Pizza & Grill.
Leave BJ’s off your buy list for 2014 until the momentum pendulum starts swinging the other way.