The Zacks Analyst Blog Highlights: NRG Energy, SunPower, BJ's Restaurants, Brinker International and Texas Roadhouse

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Mar 09, 2012, 09:30 ET

CHICAGO, March 9, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include NRG Energy, Inc. (NYSE: NRG), SunPower Corporation (Nasdaq: SPWR), BJ's Restaurants Inc. (Nasdaq: BJRI), Brinker International Inc. (NYSE: EAT) and Texas Roadhouse Inc. (Nasdaq: TXRH).

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Here are highlights from Thursday's Analyst Blog:

NRG Set to Ramp Solar Portfolio

NRG Energy, Inc.'s (NYSE: NRG) subsidiary, NRG Solar LLC is on its way to expand its solar power generation portfolio. The company plans to develop projects, with a capacity of over 11 megawatt (MW), in collaboration with PsomasFMG LLC. The deal comprises a 7.3 MW project at William S. Hart School District in Santa Clarita, California and another project with a capacity of 3.3 MW in the County of Orange, California.

NRG will be in charge of the financial resources and raw materials, primarily power inverters and solar panels. On the other hand, PsomasFMG will provide support in terms of the design and construction of the project.

After completion of this project, the companies will sell solar-generated electricity to the facility owners who sign the power purchase agreements. The revenue-sharing will be done on the basis of individual contributions for each project.

In November 2011, NRG and SunPower Corporation (Nasdaq: SPWR) began the construction of a 250-megawatt project at California Valley Solar Ranch. During the 2-year construction period, the project is expected to create 350 jobs and inject $315 million in the local economy.

During NRG's earnings conference call, the company announced its plans to allocate approximately $553 million for environment capital expenditure for the 2012–2016 span. The investment would be made in compliance with the government's stringent environmental rules and regulations.

Earlier, NRG acquired stakes in three Utility Scale Solar facilities namely California Valley Solar Ranch, Agua Caliente and Ivanpah for approximately $165 million as part of its efforts to capitalize on the future growth opportunities in renewables.

As of December 31, 2011, NRG reported total electricity generation of 25,135 MW, out of which 95 MW was contributed by Utility Scale Solar and Distributed Solar segments. NRG Energy is a pioneer in developing cleaner and smarter energy choices for its customers.

The company is expanding its solar energy portfolio and continues to maintain its dominance in the sustainable energy space. The company has a large-scale photovoltaic and solar thermal projects pipeline, with an approximate capacity of 2,000 MW, spread across different locations in Southwestern United States and the Western Hemisphere. The company expects the output to go up to 860 MW next year.

We expect that NRG is well positioned with a consistent cash balance and is using the same to increase shareholder value through share repurchases and expansion of its solar power generation portfolio. The company entered into several agreements to acquire solar power generation assets and distribution companies and develop solar power plants with its partners.

NRG Energy currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

BJ's Restaurants Downgraded

We have recently downgraded our long-term rating on the shares of BJ's Restaurants Inc. (Nasdaq: BJRI) to Neutral from Outperform due to the higher cost structure for 2012 as well as tougher sales comparison in the upcoming first quarter.

Boasting a unique position in the commoditized hyper-competitive bar and grill segment, along with a viable business strategy, BJ's Restaurants offer investors one of the strongest growth stories in the U.S. restaurant industry.

The company's earnings have been able to beat the consensus over the trailing four quarters by an average surprise of 15.08%. While the new menu and beverage ready for rollout this spring and summer will likely add some flavors to the upcoming quarters' earnings of BJ's, there is set of factors which could put its growth on hold in the near term.

BJ's always experiences higher labor costs in the first quarter of each year due to the resetting of state unemployment taxes and FICA limits. Management generally incurs increased payroll taxes in the first and second quarter of each year. BJ's expects to see some higher state payroll taxes as many states have increased their payroll taxes to help fund their unemployment deficit.

There will also be pressure on medical benefits in 2012, which currently account for approximately 1% of sales. Additionally, the company continues to witness higher hourly labor, primarily in the kitchen, due to the complexity of new menu offerings.

Some increases in consulting costs related to certain ongoing initiatives and higher training as well as recruiting costs related to expected openings in 2012 are also likely. Total commodity basket is expected to be up around 4% in 2012. Hence, a higher cost structure, in turn, will lessen the magnitude of margin rebound.

Operation for the first quarter of fiscal 2012 began on January 4, 2012 compared to December 29 last year. Hence, the first quarter of 2012 is seeing tougher comparison with the absence of Christmas and New Year. This will hurt first quarter comparable restaurant sales as well as the change in average weekly sales.

Following the earnings, there was a negative sentiment prevailing among the analysts regarding the upcoming quarters with majority of estimates moving southward.

BJ's Restaurants, which competes with the likes of Brinker International Inc. (NYSE: EAT) and Texas Roadhouse Inc. (Nasdaq: TXRH), currently retains the Zacks #3 Rank that translates into a short-term Hold rating.

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