BJ’s Restaurants, Inc. (BJRI) has grown rapidly with its unique concept and high-quality food offered at various price points, while maintaining some of the best unit economics in the industry. Same-store sales, although weak, are outperforming the peer group.

Longer-term, however, we think BJ’s 20%+ unit growth target could become unmanageable or difficult to fund. Since 2002, ROE/ROIC have averaged in the mid single-digits, with full-year results rising above 6% only once, when ROE reached 8% in 2005.

Returns on capital must improve to support long-term growth. Trading at a premium to its growth rate (26x 2010E), we believe BJRI shares are richly priced.Zacks Investment Research