<div id="readability-page-1"><div><h3>Key Insights</h3><ul><li> BJ's Restaurants' estimated fair value is US$32.04 based on 2 Stage Free Cash Flow to Equity </li> <li> With US$37.20 share price, BJ's Restaurants appears to be trading close to its estimated fair value </li> <li> Our fair value estimate is 18% lower than BJ's Restaurants' analyst price target of US$38.88 </li> </ul><p>Today we will run through one way of estimating the intrinsic value of BJ's Restaurants, Inc. (NASDAQ:BJRI) by taking the forecast future cash flows of the company and discounting them back to today's value.  This will be done using the Discounted Cash Flow (DCF) model.  Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow.</p><p> We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios.  For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. </p><p>We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.</p><h2> Is BJ's Restaurants Fairly Valued? </h2> <p> We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period.  To start off with, we need to estimate the next ten years of cash flows.   Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.  </p><p> A DCF is all about the idea that a dollar in the future is less valuable than a dollar today,  and so the sum of these future cash flows is then discounted to today's value: </p><h4> 10-year free cash flow (FCF) estimate </h4><table><tbody><tr><td> </td><td><strong>2026</strong></td><td><strong>2027</strong></td><td><strong>2028</strong></td><td><strong>2029</strong></td><td><strong>2030</strong></td><td><strong>2031</strong></td><td><strong>2032</strong></td><td><strong>2033</strong></td><td><strong>2034</strong></td><td><strong>2035</strong></td></tr><tr><td><strong> Levered FCF ($, Millions) </strong></td><td>US$39.8m</td><td>US$43.1m</td><td>US$46.0m</td><td>US$48.7m</td><td>US$51.1m</td><td>US$53.4m</td><td>US$55.6m</td><td>US$57.7m</td><td>US$59.9m</td><td>US$62.0m</td></tr><tr><td><strong>Growth Rate Estimate Source</strong></td><td>Analyst x1</td><td>Est @ 8.33%</td><td>Est @ 6.81%</td><td>Est @ 5.74%</td><td>Est @ 5.00%</td><td>Est @ 4.48%</td><td>Est @ 4.11%</td><td>Est @ 3.86%</td><td>Est @ 3.68%</td><td>Est @ 3.55%</td></tr><tr><td><strong> Present Value ($, Millions) Discounted @ 10.0% </strong></td><td>US$36.2</td><td>US$35.7</td><td>US$34.6</td><td>US$33.3</td><td>US$31.8</td><td>US$30.2</td><td>US$28.6</td><td>US$27.0</td><td>US$25.5</td><td>US$24.0</td></tr></tbody></table><p><i>(&#34;Est&#34; = FCF growth rate estimated by Simply Wall St)</i><br/><strong>Present Value of 10-year Cash Flow (PVCF)</strong> = US$307m</p><p> The second stage is also known as Terminal Value, this is the business's cash flow after the first stage.  The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 3.3%. We discount the terminal cash flows to today's value at a cost of equity of 10.0%. </p><p><strong>Terminal Value (TV)</strong>= FCF<sub>2035</sub> × (1 + g) ÷ (r – g) = US$62m× (1 + 3.3%) ÷ (10.0%– 3.3%) = US$956m</p><p><strong>Present Value of Terminal Value (PVTV)</strong>= TV / (1 + r)<sup>10</sup>= US$956m÷ ( 1 + 10.0%)<sup>10</sup>= US$370m</p><p> The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value,  which in this case is US$677m.  In the final step we divide the equity value by the number of shares outstanding.  Relative to the current share price of US$37.2, the company appears   around fair value    at the time of writing.   The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. </p><figure><img height="760" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/374469-dcf-1-dark-2/1763128106193?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1706" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/374469-dcf-1-dark-2/1763128106193"/><figcaption>NasdaqGS:BJRI Discounted Cash Flow November 14th 2025</figcaption></figure> <h2> The Assumptions </h2><p> We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.  You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them.  The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance.  Given that we are looking at BJ's Restaurants as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt.  In this calculation we've used 10.0%, which is based on a levered beta of 1.449. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. </p> <p><span> Check out our latest analysis for BJ's Restaurants </span></p><h3>SWOT Analysis for BJ's Restaurants</h3><div><div><p><strong>Strength</strong></p><ul><li>Debt is not viewed as a risk.</li></ul> <ul>Balance sheet summary for BJRI.</ul> </div><div><p><strong>Weakness</strong></p><ul><li>Earnings growth over the past year underperformed the Hospitality industry.</li></ul> <ul><li>Expensive based on P/E ratio and estimated fair value.</li></ul> </div><div><p><strong>Opportunity</strong></p><ul><li>Annual earnings are forecast to grow faster than the American market.</li></ul> </div><div><p><strong>Threat</strong></p><ul><li>Annual revenue is forecast to grow slower than the American market.</li></ul> <ul> What else are analysts forecasting for BJRI?</ul> </div></div><h2> Next Steps: </h2><p> Valuation is only one side of the coin in terms of building your investment thesis, and it  is only one of many factors that you need to assess for a company.  DCF models are not the be-all and end-all of investment valuation.  Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation.  If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different.  For BJ's Restaurants, we've put together three  fundamental  aspects  you should explore: </p><ol> <li> <strong>Risks</strong>: Take risks, for example - BJ's Restaurants has  <strong> 2 warning signs </strong>  we think you should be aware of. </li> <li> <strong>Future Earnings</strong>: How does BJRI's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. </li><li> <strong>Other High Quality Alternatives</strong>: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! </li> </ol><p>PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.</p></div></div>

BJRI

<p>BJ's Restaurants' estimated fair value is $32.04 based on a two-stage DCF model, while its current share price is $37.20, close to this estimate. The fair value is 18% lower than the analyst target of $38.88. The DCF model considers future cash flows and discounts them to present value, highlighting the importance of discount rates and cash flow assumptions. The analysis suggests BJ's Restaurants is fairly valued, but emphasizes the need for caution due to potential industry cyclicality and capital requirements.</p>

Estimating The Fair Value Of BJ's Restaurants, Inc. (NASDAQ:BJRI)