BJRI is a buy

Catalysts

1. Luxor Capital and PW Partners own 10% of the company – pushing to get new directors elected to the board.

2. Menu innovation, happy hour program embracing mobile technology – save 20% if you order ahead, BJ’s should trade closer to $44m – near term.
3. Winter weather – coming to an end.

Fundamental case for upside.

1. Trading at 25xx forward earnings, but over last 10 years – traded at an av of 42x earnings, current price to sales is 1.2x, over the last decade its average sales multiple has been 1.7x, industry is trading closer towards 2.1x.

2. Analysts expect earnings to grow at 20% annualized over next 5 years vs 15% industry average. Assuming sales can grow @ CAGR of 10% over next 2 years – that puts 2015 sales at $950mn. If the sales multiple only goes up to 1.3x – BJ’s price target is 43.5. 26% upside in 2 years. If 1.7x – then target is 56.88 – 65.39% upside potential.