Intrinsic value of BJ's Restaurants - BJRI

Previous Close

$63.69

  Intrinsic Value

$20.05

stock screener

  Rating & Target

str. sell

-69%

Previous close

$63.69

 
Intrinsic value

$20.05

 
Up/down potential

-69%

 
Rating

str. sell

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 1.3

 

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, %
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
Revenue, $m
  1,116
  1,204
  1,296
  1,391
  1,490
  1,592
  1,699
  1,810
  1,925
  2,045
  2,170
  2,301
  2,437
  2,578
  2,726
  2,880
  3,041
  3,210
  3,386
  3,570
  3,762
  3,963
  4,174
  4,394
  4,625
  4,867
  5,121
  5,386
  5,664
  5,956
Variable operating expenses, $m
  1,046
  1,128
  1,214
  1,303
  1,396
  1,492
  1,592
  1,695
  1,804
  1,916
  2,033
  2,155
  2,282
  2,415
  2,553
  2,698
  2,848
  3,006
  3,171
  3,343
  3,523
  3,712
  3,909
  4,115
  4,332
  4,558
  4,796
  5,044
  5,305
  5,578
Fixed operating expenses, $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 operating expenses, $m
  1,046
  1,128
  1,214
  1,303
  1,396
  1,492
  1,592
  1,695
  1,804
  1,916
  2,033
  2,155
  2,282
  2,415
  2,553
  2,698
  2,848
  3,006
  3,171
  3,343
  3,523
  3,712
  3,909
  4,115
  4,332
  4,558
  4,796
  5,044
  5,305
  5,578
Operating income, $m
  70
  76
  82
  88
  94
  101
  107
  114
  122
  129
  138
  146
  155
  164
  173
  183
  193
  204
  215
  226
  239
  251
  265
  279
  293
  309
  325
  342
  359
  378
EBITDA, $m
  145
  157
  168
  181
  194
  207
  221
  235
  250
  266
  282
  299
  317
  335
  354
  374
  395
  417
  440
  464
  489
  515
  543
  571
  601
  633
  666
  700
  736
  774
Interest expense (income), $m
  1
  9
  11
  13
  15
  17
  19
  21
  24
  26
  29
  31
  34
  37
  40
  43
  47
  50
  54
  57
  61
  65
  70
  74
  79
  84
  89
  94
  100
  106
  112
Earnings before tax, $m
  62
  65
  69
  73
  77
  82
  86
  91
  96
  101
  106
  112
  118
  123
  130
  136
  143
  150
  157
  165
  173
  182
  191
  200
  210
  220
  231
  242
  254
  266
Tax expense, $m
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
  43
  45
  47
  49
  51
  54
  57
  59
  62
  65
  68
  72
Net income, $m
  45
  48
  50
  53
  56
  60
  63
  66
  70
  73
  78
  82
  86
  90
  95
  99
  104
  110
  115
  121
  127
  133
  139
  146
  153
  161
  168
  177
  185
  194

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
  741
  799
  860
  923
  988
  1,057
  1,127
  1,201
  1,278
  1,357
  1,440
  1,527
  1,617
  1,711
  1,809
  1,911
  2,018
  2,130
  2,247
  2,369
  2,496
  2,630
  2,770
  2,916
  3,069
  3,230
  3,398
  3,574
  3,759
  3,952
Adjusted assets (=assets-cash), $m
  741
  799
  860
  923
  988
  1,057
  1,127
  1,201
  1,278
  1,357
  1,440
  1,527
  1,617
  1,711
  1,809
  1,911
  2,018
  2,130
  2,247
  2,369
  2,496
  2,630
  2,770
  2,916
  3,069
  3,230
  3,398
  3,574
  3,759
  3,952
Revenue / Adjusted assets
  1.506
  1.507
  1.507
  1.507
  1.508
  1.506
  1.508
  1.507
  1.506
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
  1.507
Average production assets, $m
  646
  697
  750
  805
  862
  922
  984
  1,048
  1,115
  1,184
  1,257
  1,332
  1,411
  1,493
  1,578
  1,668
  1,761
  1,858
  1,960
  2,067
  2,178
  2,295
  2,417
  2,544
  2,678
  2,818
  2,965
  3,119
  3,280
  3,449
Working capital, $m
  -94
  -101
  -109
  -117
  -125
  -134
  -143
  -152
  -162
  -172
  -182
  -193
  -205
  -217
  -229
  -242
  -255
  -270
  -284
  -300
  -316
  -333
  -351
  -369
  -389
  -409
  -430
  -452
  -476
  -500
Total debt, $m
  198
  234
  272
  311
  352
  394
  438
  484
  532
  581
  633
  687
  743
  801
  862
  926
  993
  1,062
  1,135
  1,211
  1,290
  1,373
  1,460
  1,551
  1,646
  1,746
  1,851
  1,960
  2,075
  2,196
Total liabilities, $m
  461
  497
  535
  574
  615
  657
  701
  747
  795
  844
  896
  950
  1,006
  1,064
  1,125
  1,189
  1,255
  1,325
  1,397
  1,473
  1,553
  1,636
  1,723
  1,814
  1,909
  2,009
  2,113
  2,223
  2,338
  2,458
Total equity, $m
  280
  302
  325
  349
  374
  399
  426
  454
  483
  513
  544
  577
  611
  647
  684
  722
  763
  805
  849
  895
  944
  994
  1,047
  1,102
  1,160
  1,221
  1,284
  1,351
  1,421
  1,494
Total liabilities and equity, $m
  741
  799
  860
  923
  989
  1,056
  1,127
  1,201
  1,278
  1,357
  1,440
  1,527
  1,617
  1,711
  1,809
  1,911
  2,018
  2,130
  2,246
  2,368
  2,497
  2,630
  2,770
  2,916
  3,069
  3,230
  3,397
  3,574
  3,759
  3,952
Debt-to-equity ratio
  0.710
  0.780
  0.840
  0.890
  0.940
  0.990
  1.030
  1.070
  1.100
  1.130
  1.160
  1.190
  1.220
  1.240
  1.260
  1.280
  1.300
  1.320
  1.340
  1.350
  1.370
  1.380
  1.390
  1.410
  1.420
  1.430
  1.440
  1.450
  1.460
  1.470
Adjusted equity ratio
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378
  0.378

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  45
  48
  50
  53
  56
  60
  63
  66
  70
  73
  78
  82
  86
  90
  95
  99
  104
  110
  115
  121
  127
  133
  139
  146
  153
  161
  168
  177
  185
  194
Depreciation, amort., depletion, $m
  75
  81
  87
  93
  100
  106
  114
  121
  129
  137
  144
  153
  162
  172
  181
  192
  202
  214
  225
  238
  250
  264
  278
  292
  308
  324
  341
  358
  377
  396
Funds from operations, $m
  120
  128
  137
  146
  156
  166
  176
  187
  198
  210
  222
  235
  248
  262
  276
  291
  307
  323
  340
  358
  377
  396
  417
  438
  461
  484
  509
  535
  562
  590
Change in working capital, $m
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -25
Cash from operations, $m
  127
  136
  145
  154
  164
  175
  185
  196
  208
  220
  233
  246
  259
  274
  289
  304
  320
  337
  355
  374
  393
  413
  435
  457
  480
  505
  530
  557
  585
  615
Maintenance CAPEX, $m
  -69
  -74
  -80
  -86
  -93
  -99
  -106
  -113
  -120
  -128
  -136
  -144
  -153
  -162
  -172
  -181
  -192
  -202
  -214
  -225
  -238
  -250
  -264
  -278
  -292
  -308
  -324
  -341
  -358
  -377
New CAPEX, $m
  -48
  -51
  -53
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -72
  -75
  -79
  -82
  -86
  -89
  -93
  -97
  -102
  -106
  -111
  -117
  -122
  -128
  -134
  -140
  -147
  -154
  -161
  -169
Cash from investing activities, $m
  -117
  -125
  -133
  -141
  -150
  -158
  -168
  -177
  -187
  -198
  -208
  -219
  -232
  -244
  -258
  -270
  -285
  -299
  -316
  -331
  -349
  -367
  -386
  -406
  -426
  -448
  -471
  -495
  -519
  -546
Free cash flow, $m
  10
  10
  12
  13
  15
  16
  18
  19
  21
  22
  24
  26
  28
  29
  31
  33
  35
  37
  40
  42
  44
  46
  49
  52
  54
  57
  60
  63
  66
  69
Issuance/(repayment) of debt, $m
  35
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  58
  61
  64
  66
  69
  73
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  120
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  
  35
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  58
  61
  64
  66
  69
  73
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  120
Total cash flow (excl. dividends), $m
  44
  47
  49
  52
  55
  58
  62
  65
  68
  72
  76
  80
  84
  88
  92
  97
  102
  107
  112
  118
  124
  130
  136
  143
  149
  157
  164
  172
  181
  190
Retained Cash Flow (-), $m
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -70
  -73
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
  23
  25
  27
  28
  31
  33
  35
  37
  39
  42
  44
  47
  50
  52
  55
  58
  61
  65
  68
  72
  75
  79
  83
  87
  92
  96
  101
  106
  111
  116
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
  22
  23
  23
  23
  24
  24
  24
  23
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Current shareholders' claim on cash, %
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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 (BJRI)

Valuation Ratios
P/E Ratio 30.9
Price to Sales 1.4
Price to Book 5.2
Price to Tangible Book
Price to Cash Flow 10.3
Price to Free Cash Flow 49
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 $1031.782 million for the last fiscal year's total revenue generated by BJ's Restaurants. The default revenue input number comes from 0001 income statement of BJ's Restaurants. 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 8.2% 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, 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.
    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 93.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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.

Corporate tax rate of 27% is the nominal tax rate for BJ's Restaurants. 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 57.9%.

Life of production assets of 8.7 years is the average useful life of capital assets used in BJ's Restaurants 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 -8.4%. 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 - $258.729 million for BJ's Restaurants - 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 21.019 million for BJ's Restaurants 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 at the current share price and the inputted number of shares is $1.3 billion.

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COMPANY NEWS

▶ BJ's Restaurants Is Still On Fire   [08:48AM  Motley Fool]
▶ BJ's Restaurants: 3Q Earnings Snapshot   [04:43PM  Associated Press]
▶ 10 A-Rated Consumer Stocks to Buy   [Oct-26-18 02:28PM  InvestorPlace]
▶ 7 Small-Cap Restaurant Stocks to Buy   [Sep-12-18 12:11PM  InvestorPlace]
▶ BJs Restaurants Opens in Livonia, Michigan   [01:00PM  GlobeNewswire]
▶ Retail Spearheads the Longest-Ever Bull Run: 5 Top Picks   [Aug-22-18 03:03PM  InvestorPlace]
▶ 5 Stocks to Buy on a Historic Job Growth Streak   [Aug-06-18 09:59AM  InvestorPlace]
▶ BJ's Restaurants: 2Q Earnings Snapshot   [Jul-26-18 05:00PM  Associated Press]
▶ The 5 Best Restaurant Stocks of 2018 (So Far)   [Jul-05-18 07:00PM  Motley Fool]
▶ BJs Restaurants Opens 200th Restaurant in Colonie, New York   [Jun-12-18 01:00PM  GlobeNewswire]
▶ BJs Restaurants Opens in Hagerstown, Maryland   [May-22-18 01:00PM  GlobeNewswire]

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