Intrinsic value of BJ's Restaurants, Inc. - BJRI

Previous Close

$37.19

  Intrinsic Value

$91.48

stock screener

  Rating & Target

str. buy

+146%

Previous close

$37.19

 
Intrinsic value

$91.48

 
Up/down potential

+146%

 
Rating

str. buy

We calculate the intrinsic value of BJRI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  7.40
  7.16
  6.94
  6.75
  6.57
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.16
  5.14
  5.13
  5.11
Revenue, $m
  1,200
  1,286
  1,375
  1,468
  1,564
  1,664
  1,769
  1,878
  1,991
  2,109
  2,232
  2,361
  2,495
  2,635
  2,781
  2,933
  3,093
  3,260
  3,435
  3,618
  3,809
  4,010
  4,220
  4,440
  4,670
  4,912
  5,165
  5,430
  5,709
  6,001
Variable operating expenses, $m
  955
  1,020
  1,086
  1,156
  1,228
  1,303
  1,381
  1,462
  1,547
  1,635
  1,669
  1,765
  1,865
  1,970
  2,079
  2,194
  2,313
  2,438
  2,569
  2,705
  2,849
  2,999
  3,156
  3,320
  3,492
  3,673
  3,862
  4,061
  4,269
  4,487
Fixed operating expenses, $m
  174
  178
  181
  185
  190
  194
  198
  202
  207
  211
  216
  221
  226
  231
  236
  241
  246
  252
  257
  263
  268
  274
  280
  287
  293
  299
  306
  313
  320
  327
Total operating expenses, $m
  1,129
  1,198
  1,267
  1,341
  1,418
  1,497
  1,579
  1,664
  1,754
  1,846
  1,885
  1,986
  2,091
  2,201
  2,315
  2,435
  2,559
  2,690
  2,826
  2,968
  3,117
  3,273
  3,436
  3,607
  3,785
  3,972
  4,168
  4,374
  4,589
  4,814
Operating income, $m
  71
  88
  107
  126
  147
  168
  190
  213
  237
  262
  347
  375
  404
  434
  466
  499
  534
  571
  609
  650
  692
  737
  784
  833
  885
  939
  997
  1,057
  1,120
  1,187
EBITDA, $m
  204
  227
  252
  277
  303
  330
  359
  389
  420
  453
  487
  523
  560
  599
  640
  683
  728
  775
  825
  877
  931
  988
  1,049
  1,112
  1,178
  1,248
  1,321
  1,398
  1,478
  1,563
Interest expense (income), $m
  1
  5
  7
  8
  10
  12
  13
  15
  17
  19
  21
  24
  26
  28
  31
  33
  36
  39
  42
  45
  48
  52
  55
  59
  63
  67
  71
  76
  81
  86
  91
Earnings before tax, $m
  65
  82
  99
  116
  135
  154
  175
  196
  218
  241
  323
  349
  375
  403
  432
  463
  495
  529
  564
  601
  640
  682
  725
  770
  818
  868
  921
  976
  1,035
  1,096
Tax expense, $m
  18
  22
  27
  31
  36
  42
  47
  53
  59
  65
  87
  94
  101
  109
  117
  125
  134
  143
  152
  162
  173
  184
  196
  208
  221
  234
  249
  264
  279
  296
Net income, $m
  48
  60
  72
  85
  99
  113
  127
  143
  159
  176
  236
  255
  274
  294
  316
  338
  361
  386
  412
  439
  468
  498
  529
  562
  597
  634
  672
  713
  755
  800

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  747
  800
  856
  913
  973
  1,036
  1,101
  1,168
  1,239
  1,312
  1,389
  1,469
  1,552
  1,639
  1,730
  1,825
  1,925
  2,029
  2,138
  2,251
  2,370
  2,495
  2,626
  2,763
  2,906
  3,056
  3,214
  3,379
  3,552
  3,734
Adjusted assets (=assets-cash), $m
  747
  800
  856
  913
  973
  1,036
  1,101
  1,168
  1,239
  1,312
  1,389
  1,469
  1,552
  1,639
  1,730
  1,825
  1,925
  2,029
  2,138
  2,251
  2,370
  2,495
  2,626
  2,763
  2,906
  3,056
  3,214
  3,379
  3,552
  3,734
Revenue / Adjusted assets
  1.606
  1.608
  1.606
  1.608
  1.607
  1.606
  1.607
  1.608
  1.607
  1.607
  1.607
  1.607
  1.608
  1.608
  1.608
  1.607
  1.607
  1.607
  1.607
  1.607
  1.607
  1.607
  1.607
  1.607
  1.607
  1.607
  1.607
  1.607
  1.607
  1.607
Average production assets, $m
  632
  677
  725
  773
  824
  877
  932
  990
  1,049
  1,111
  1,176
  1,244
  1,315
  1,388
  1,465
  1,546
  1,630
  1,718
  1,810
  1,907
  2,008
  2,113
  2,224
  2,340
  2,461
  2,589
  2,722
  2,862
  3,009
  3,162
Working capital, $m
  -109
  -117
  -125
  -134
  -142
  -151
  -161
  -171
  -181
  -192
  -203
  -215
  -227
  -240
  -253
  -267
  -281
  -297
  -313
  -329
  -347
  -365
  -384
  -404
  -425
  -447
  -470
  -494
  -520
  -546
Total debt, $m
  123
  153
  184
  216
  249
  284
  320
  358
  397
  437
  480
  524
  571
  619
  669
  722
  777
  835
  895
  959
  1,025
  1,094
  1,166
  1,242
  1,322
  1,405
  1,493
  1,585
  1,681
  1,782
Total liabilities, $m
  414
  444
  475
  507
  540
  575
  611
  648
  688
  728
  771
  815
  862
  910
  960
  1,013
  1,068
  1,126
  1,186
  1,249
  1,316
  1,385
  1,457
  1,533
  1,613
  1,696
  1,784
  1,875
  1,972
  2,072
Total equity, $m
  332
  356
  381
  406
  433
  461
  490
  520
  551
  584
  618
  654
  691
  730
  770
  812
  857
  903
  951
  1,002
  1,055
  1,110
  1,169
  1,229
  1,293
  1,360
  1,430
  1,504
  1,581
  1,662
Total liabilities and equity, $m
  746
  800
  856
  913
  973
  1,036
  1,101
  1,168
  1,239
  1,312
  1,389
  1,469
  1,553
  1,640
  1,730
  1,825
  1,925
  2,029
  2,137
  2,251
  2,371
  2,495
  2,626
  2,762
  2,906
  3,056
  3,214
  3,379
  3,553
  3,734
Debt-to-equity ratio
  0.370
  0.430
  0.480
  0.530
  0.580
  0.620
  0.650
  0.690
  0.720
  0.750
  0.780
  0.800
  0.830
  0.850
  0.870
  0.890
  0.910
  0.920
  0.940
  0.960
  0.970
  0.990
  1.000
  1.010
  1.020
  1.030
  1.040
  1.050
  1.060
  1.070
Adjusted equity ratio
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445
  0.445

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  48
  60
  72
  85
  99
  113
  127
  143
  159
  176
  236
  255
  274
  294
  316
  338
  361
  386
  412
  439
  468
  498
  529
  562
  597
  634
  672
  713
  755
  800
Depreciation, amort., depletion, $m
  134
  139
  145
  150
  156
  163
  169
  176
  183
  191
  140
  148
  157
  165
  174
  184
  194
  205
  216
  227
  239
  252
  265
  279
  293
  308
  324
  341
  358
  376
Funds from operations, $m
  181
  199
  217
  235
  255
  275
  297
  319
  342
  366
  376
  403
  430
  460
  490
  522
  555
  591
  627
  666
  707
  749
  794
  841
  890
  942
  996
  1,053
  1,113
  1,177
Change in working capital, $m
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
Cash from operations, $m
  189
  206
  225
  244
  264
  284
  306
  329
  352
  377
  387
  414
  443
  472
  503
  536
  570
  606
  643
  683
  724
  767
  813
  861
  911
  964
  1,019
  1,078
  1,139
  1,203
Maintenance CAPEX, $m
  -70
  -75
  -81
  -86
  -92
  -98
  -104
  -111
  -118
  -125
  -132
  -140
  -148
  -157
  -165
  -174
  -184
  -194
  -205
  -216
  -227
  -239
  -252
  -265
  -279
  -293
  -308
  -324
  -341
  -358
New CAPEX, $m
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -68
  -71
  -74
  -77
  -81
  -84
  -88
  -92
  -96
  -101
  -106
  -111
  -116
  -121
  -127
  -133
  -140
  -147
  -154
Cash from investing activities, $m
  -114
  -120
  -128
  -135
  -143
  -151
  -159
  -168
  -178
  -187
  -197
  -208
  -219
  -231
  -242
  -255
  -268
  -282
  -297
  -312
  -328
  -345
  -363
  -381
  -400
  -420
  -441
  -464
  -488
  -512
Free cash flow, $m
  75
  86
  97
  109
  121
  133
  147
  161
  175
  190
  190
  207
  224
  242
  261
  281
  302
  324
  347
  371
  396
  423
  451
  480
  511
  543
  578
  614
  651
  691
Issuance/(repayment) of debt, $m
  28
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  83
  87
  92
  96
  101
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  28
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  83
  87
  92
  96
  101
Total cash flow (excl. dividends), $m
  104
  116
  128
  141
  154
  168
  183
  198
  214
  231
  233
  251
  270
  290
  311
  334
  357
  381
  407
  434
  462
  492
  523
  556
  591
  627
  665
  705
  748
  792
Retained Cash Flow (-), $m
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -58
  -61
  -64
  -67
  -70
  -74
  -77
  -81
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  81
  92
  103
  115
  127
  140
  154
  168
  183
  198
  199
  215
  233
  252
  271
  291
  313
  335
  359
  383
  409
  436
  465
  495
  527
  560
  595
  632
  670
  711
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  77
  84
  90
  95
  99
  102
  104
  105
  105
  104
  94
  92
  89
  84
  80
  74
  68
  62
  55
  49
  42
  36
  30
  25
  20
  16
  13
  10
  7
  5
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

BJ's Restaurants, Inc. owns and operates restaurants. The Company segment includes casual dining company-owned restaurants. Each of its restaurants is operated either as a BJ's Restaurant & Brewhouse, a BJ's Restaurant & Brewery, a BJ's Pizza & Grill or a BJ's Grill restaurant. The Company's restaurants offer craft beers and other beers, as well as a selection of appetizers, entrees, pastas, burgers and sandwiches, specialty salads, and desserts, including its warm pizza cookie dessert, the Pizookie. As of February 27, 2017, the Company owned and operated 189 restaurants located in 24 states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia and Washington.

FINANCIAL RATIOS  of  BJ's Restaurants, Inc. (BJRI)

Valuation Ratios
P/E Ratio 18.1
Price to Sales 0.8
Price to Book 3
Price to Tangible Book
Price to Cash Flow 6
Price to Free Cash Flow 28.6
Growth Rates
Sales Growth Rate 7.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 26.7%
Cap. Spend. - 3 Yr. Gr. Rate -1.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 53.8%
Total Debt to Equity 53.8%
Interest Coverage 62
Management Effectiveness
Return On Assets 6.8%
Ret/ On Assets - 3 Yr. Avg. 6%
Return On Total Capital 11%
Ret/ On T. Cap. - 3 Yr. Avg. 9.5%
Return On Equity 15.6%
Return On Equity - 3 Yr. Avg. 12.1%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 39.9%
Gross Margin - 3 Yr. Avg. 40.1%
EBITDA Margin 12.7%
EBITDA Margin - 3 Yr. Avg. 12.2%
Operating Margin 6.2%
Oper. Margin - 3 Yr. Avg. 5.8%
Pre-Tax Margin 6.1%
Pre-Tax Margin - 3 Yr. Avg. 5.7%
Net Profit Margin 4.6%
Net Profit Margin - 3 Yr. Avg. 4.2%
Effective Tax Rate 24.6%
Eff/ Tax Rate - 3 Yr. Avg. 25.7%
Payout Ratio 0%

BJRI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BJRI stock intrinsic value calculation we used $1117 million for the last fiscal year's total revenue generated by BJ's Restaurants, Inc.. The default revenue input number comes from 0001 income statement of BJ's Restaurants, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BJRI stock valuation model: a) initial revenue growth rate of 7.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for BJRI is calculated based on our internal credit rating of BJ's Restaurants, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of BJ's Restaurants, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BJRI stock the variable cost ratio is equal to 80%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $170 million in the base year in the intrinsic value calculation for BJRI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for BJ's Restaurants, Inc..

Corporate tax rate of 27% is the nominal tax rate for BJ's Restaurants, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BJRI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BJRI are equal to 52.7%.

Life of production assets of 8.4 years is the average useful life of capital assets used in BJ's Restaurants, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BJRI is equal to -9.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $309.221 million for BJ's Restaurants, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 21.078 million for BJ's Restaurants, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of BJ's Restaurants, Inc. at the current share price and the inputted number of shares is $0.8 billion.

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