Then we have the Shop House Asian concept, while management seems to becoming comfortable with their new “magic” formula, it is easy to forecast another 400-500 locations in the next decade. This all adds up to some awesome potential gains for investors over the next decade or so.
How about our other two contestants?
Not wanting to bog busy readers down with too much information, let’s cut to the chase and just look at BJ’s Restaurants, Inc. (NASDAQ:BJRI) and Chuy’s Holdings Inc (NASDAQ:CHUY) net incomes from their 10K’s to see if we can detect any trends.
| 2008 | 2009 | 2010 | 2011 | 2012 | |
| BJRI | $1.38 | $1.53 | $2.25 | $2.54 | $2.22 |
| Chuy’s | $0.002 | $0.024 | ($1.23) | $0.016 | $0.95 |
Other than a “hiccup” in 2012, BJ’s Restaurants, Inc. (NASDAQ:BJRI) has done a solid job improving its bottom line. As the management team has plans of more than doubling the number of restaurants, margins should increase as management is able to spread general and administrative expenses over a larger revenue base. An expanding restaurant base will also improve name recognition, which will have at least two positive impacts on their bottom line. First by lowering their average marketing budget per location and second by helping to improve restaurant comps. This is a stock that is worth at least keeping on your watch list.
The bad showing in 2010 for Chuy’s Holdings Inc (NASDAQ:CHUY) is due in large part to “undistributed earnings allocated to participating interests.” Overlooking 2010, Chuy’s has done a terrific job of improving its net income. Out of the three, I believe Chuy’s has the best upside as they should be able to grow from their current 44 restaurants, to maybe 400-500 over the next decade. Of course, time only will tell.
Foolish bottom line
While I have high hopes for Chuy’s Holdings Inc (NASDAQ:CHUY), I believe Chipotle Mexican Grill, Inc. (NYSE:CMG) offers the safest expectations of the three. The company is a good steady grower and I believe investors should be able to get a 20% yearly return for many years to come. The wild card of course is Shop House, if management can reproduce their magic, CMG may actually turn in better returns than Chuy’s over the next 15 to 20 years.
Utilizing the income statement to better understand how a company deploys its revenue, is a very quick and easy exercise and one that I have found very beneficial to my investing. It quickly highlights trends in the financials and alerts me to areas that I should take a harder look at.
I hope you found this exercise useful. What say you? Feedback is always welcome.
The article Where Did My Money Go? originally appeared on Fool.com and is written by David Paxton.
David Paxton owns shares of Chipotle Mexican Grill, Chuy’s Holdings , and BJ’s Restaurants. The Motley Fool recommends BJ’s Restaurants and Chipotle Mexican Grill. The Motley Fool owns shares of BJ’s Restaurants and Chipotle Mexican Grill. David is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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