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Activist Investors Eye Slice of BJ's Restaurants (BJRI)

Stocks in this article: BJRI

NEW YORK (TheStreet) -- Investment funds PW Partners Atlas Fund and Luxor Capital Partners announced their intention to nominate five representatives to the board of BJ's Restaurants (BJRI). The firms collectively own around 12.4% of BJ's shares.

Separately, Clinton Relational Opportunity Master Fund, which owns 0.48% of outstanding shares, said it also intends to nominate five representatives to stand for election.

The nominations will be presented at the company's 2014 annual meeting, the date of which has not yet been announced.

"BJ's has always been committed to engagement with its shareholders, including regarding corporate governance matters. The Board remains highly focused on creating the optimal conditions to generate long-term value and will continue to take actions that support the interests of all shareholders," BJ's said in a statement.

By early afternoon Thursday, shares had soared 21.1% to $33.50. Trading volume of 2.4 million was more than triple its three-month daily average.

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TheStreet Ratings team rates BJ'S RESTAURANTS INC as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate BJ'S RESTAURANTS INC (BJRI) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 8.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The share price of BJ'S RESTAURANTS INC has not done very well: it is down 13.93% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, BJ'S RESTAURANTS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for BJ'S RESTAURANTS INC is rather low; currently it is at 15.12%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.25% significantly trails the industry average.

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