Update: BJ's Restaurants Earnings

| About: BJ's Restaurants, (BJRI)

Summary

Earnings beat consensus by a large margin.

This was right in line with what we expected from BJ’s new menu and expansion efforts.

We expect BJ to continue outperforming peers when it comes to traffic as it moves toward new initiatives, such as mobile ordering and payments.

Last Thursday, BJ's Restaurants (NASDAQ:BJRI) crushed earnings, beating by 25%. EPS came in at $0.30 (versus $0.24 consensus) on revenues of $219 million. Shares are up nearly 11% since earnings. The earnings beat came as revenues were up 10.5% y/y, which was driven by menu innovation. We covered BJ's back in March, and since then shares are only up 3%. Shares still trade at a hefty discount to our $43.50 price target.

BJ's pointed to new menu items (such as Kale and Mediterranean Chicken Pita Tacos) as helping drive more interest in the chain. We believe this is a big part of the long-thesis for BJ's stock; innovation. The other part is expansion, where the company noted that its 2014 expansion plans remain on track. It's looking to open 6 stores in the second half of this year. We're also encouraged by the move toward allowing diners to pay via smartphones.

As we noted back in March:

...BJ's is investing in its food quality and menu. Changing lifestyles also means that BJ's must change. The move toward healthier and low-calorie fare is very real, and BJ's has taken notice...BJ's is looking to offer healthier meals at lower-price points. Just a few items includes its $9.50 Kale and Brussels Sprouts Salad and $8.95 Mediterranean Chicken Pita Tacos...

And,

The move toward mobile and tablets should also help with table turns, potentially moving the average ticket time from an hour to forty minutes -- ultimately increasing traffic. This comes as BJ's hasn't been known for its speed.

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