BJ’s Restaurants (BJRI) has a robust growth pipeline in the U.S., and with its cash flow generation and positive same-store sales is seeing significant long-term growth opportunities, says Scott M. Swanson, Partner and Senior Equity Analyst at Crowell, Weedon & Co.
“[BJ’s] ended the year with about 130 locations, and management at the company has stated numerous times in the past that they believe that they could operate over 400 locations in the U.S. based on the comparable-sized restaurants that they are opening today, and so that wouldn’t even include perhaps a smaller footprint or a smaller prototype that they could look at in the future,” Swanson said.
BJRI has the financial capability to increase its unit growth, as the company is generating sufficient cash flow to fund the openings and looks to continue opening locations at a rate of about 11% to 12% a year, thus generating significant earnings growth, says Swanson.
“With positive same-store sales in excess of 2% to 3%, they should be able to generate earnings growth in excess of 15%, so I think that BJ’s has a long growth runway ahead of them that should last for several years,” Swanson said.
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