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Why Is Brinker International (EAT) Up 4.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Brinker International (EAT - Free Report) . Shares have added about 4.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Brinker International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Brinker Q2 Earnings Beat Estimates, Revenues Miss
Brinker reported second-quarter fiscal 2022 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. However, both the metrics improved year over year. The company gained from the robust performance of Chili's and Maggiano's.
Earnings & Revenue Discussion
The company’s adjusted earnings per share was 71 cents, surpassing the Zacks Consensus Estimate of 50 cents. Brinker had reported an adjusted earnings of 35 cents in the year-ago quarter.
Quarterly revenues of $925.8 million missed the consensus mark of $928 million. The top line improved 21.7% on a year-over-year basis.
Chili's
Chili’s revenues in the fiscal second quarter jumped 16.1% year over year to $808.2 million, primarily due to an increase in dining room sales, marginally offset by a decline in off-premise sales.
Chili's company restaurant expenses (as a percentage of company sales) in the fiscal second quarter increased to 89.3% year over year from 88.7%. The increase was primarily due to a rise in restaurant labor costs, which includes wage rates, training and overtime. An increase in utilities expenses and commodity costs pushed the costs higher. Chili's company-owned traffic in the quarter increased 8.8% year over year, against a decline of 4.8% in the prior-year quarter.
The segment’s company-owned comps increased 12.1% in the fiscal second quarter, compared with the same period in 2021.
Comps at Chili's franchised restaurants increased 17% against a decline of 9% in the year-ago quarter. At international franchised Chili’s restaurants, the same surged 27.7% versus the year-ago quarter’s decrease of 16.2%. Meanwhile, at the U.S. franchised units, comps climbed 4.8% against the year-ago quarter’s slump of 4.7%.
At Chili's, domestic comps (including company-owned and franchised) rose 11.5% year over year against the prior-year quarter’s fall of 6.1%.
Maggiano's
Maggiano's sales soared 82.9% year over year to $117.6 million, primarily due to an increase in dining and banquet room sales. Comps increased 78.1% year over year. Traffic in the quarter rose 53.3% year over year.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal second quarter was 86.4%, compared with 94.5% in the prior-year quarter. The decrease was primarily due to sales leverage. The decline was negated by increased restaurant labor costs including training, wage rates, overtime and manager bonuses, higher repairs and maintenance expenses.
Operating Results
Total operating costs and expenses contracted to $886 million from $738.6 million in the year-ago quarter. Restaurant operating margin — as a percentage of company sales — was 10.7% compared with 11.3% in the prior-year quarter.
Balance Sheet
As of Dec 29, 2021, cash and cash equivalents amounted to $15.6 million compared with $64.1 million as of Dec 23, 2020.
Long-term debt was $1,047.3 million as of Dec 29, 2021, compared with $917.9 million on Jun 30, 2021. Total shareholders’ deficit in the reported quarter came in at ($327.4) million compared with ($303.3) million as of Jun 30, 2021.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -19.03% due to these changes.
VGM Scores
At this time, Brinker International has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Brinker International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Brinker International (EAT) Up 4.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Brinker International (EAT - Free Report) . Shares have added about 4.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Brinker International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Brinker Q2 Earnings Beat Estimates, Revenues Miss
Brinker reported second-quarter fiscal 2022 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. However, both the metrics improved year over year. The company gained from the robust performance of Chili's and Maggiano's.
Earnings & Revenue Discussion
The company’s adjusted earnings per share was 71 cents, surpassing the Zacks Consensus Estimate of 50 cents. Brinker had reported an adjusted earnings of 35 cents in the year-ago quarter.
Quarterly revenues of $925.8 million missed the consensus mark of $928 million. The top line improved 21.7% on a year-over-year basis.
Chili's
Chili’s revenues in the fiscal second quarter jumped 16.1% year over year to $808.2 million, primarily due to an increase in dining room sales, marginally offset by a decline in off-premise sales.
Chili's company restaurant expenses (as a percentage of company sales) in the fiscal second quarter increased to 89.3% year over year from 88.7%. The increase was primarily due to a rise in restaurant labor costs, which includes wage rates, training and overtime. An increase in utilities expenses and commodity costs pushed the costs higher. Chili's company-owned traffic in the quarter increased 8.8% year over year, against a decline of 4.8% in the prior-year quarter.
The segment’s company-owned comps increased 12.1% in the fiscal second quarter, compared with the same period in 2021.
Comps at Chili's franchised restaurants increased 17% against a decline of 9% in the year-ago quarter. At international franchised Chili’s restaurants, the same surged 27.7% versus the year-ago quarter’s decrease of 16.2%. Meanwhile, at the U.S. franchised units, comps climbed 4.8% against the year-ago quarter’s slump of 4.7%.
At Chili's, domestic comps (including company-owned and franchised) rose 11.5% year over year against the prior-year quarter’s fall of 6.1%.
Maggiano's
Maggiano's sales soared 82.9% year over year to $117.6 million, primarily due to an increase in dining and banquet room sales. Comps increased 78.1% year over year. Traffic in the quarter rose 53.3% year over year.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal second quarter was 86.4%, compared with 94.5% in the prior-year quarter. The decrease was primarily due to sales leverage. The decline was negated by increased restaurant labor costs including training, wage rates, overtime and manager bonuses, higher repairs and maintenance expenses.
Operating Results
Total operating costs and expenses contracted to $886 million from $738.6 million in the year-ago quarter. Restaurant operating margin — as a percentage of company sales — was 10.7% compared with 11.3% in the prior-year quarter.
Balance Sheet
As of Dec 29, 2021, cash and cash equivalents amounted to $15.6 million compared with $64.1 million as of Dec 23, 2020.
Long-term debt was $1,047.3 million as of Dec 29, 2021, compared with $917.9 million on Jun 30, 2021. Total shareholders’ deficit in the reported quarter came in at ($327.4) million compared with ($303.3) million as of Jun 30, 2021.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -19.03% due to these changes.
VGM Scores
At this time, Brinker International has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Brinker International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.