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Brinker (EAT) Stock Down 48% in Past Year: Is Revival Likely?
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Shares of Brinker International, Inc. (EAT - Free Report) have been hit hard by the coronavirus pandemic and high costs in the past year. The stock has plunged 48.3% in the past year, compared with the industry's decline of 12.8%.
However, the company has been showing some resilience of late, with the stock gaining 2% in the past month. In the past 30 days, earnings estimates for the current quarter have increased 1% to 99 cents. The company has an impressive long-term earnings growth rate of 10%. Let's delve deeper and analyze the factors likely to drive the Zacks Rank #2 (Buy) company's performance. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Key Catalysts
Brinker has been benefiting from sales-building efforts such as streamlining the menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of a better service platform.
Chili's turnaround strategies continue to yield positive results with traffic and sales. During the second quarter, Chili's total revenues increased 16.1% year over year. The upside was primarily driven by higher dining room guest sales and traffic, the acquisition of 60 Chili's restaurants from two former franchisees and six new restaurant openings. However, this was partially offset by a fall in off-premise sales. Comps at Chili's franchised restaurants increased 17% against a decline of 9% in the year-ago quarter. The upside can be attributed to an increase in dining room sales and traffic at the company's franchise restaurants. At international franchised Chili's restaurants, the same surged 27.7% against the year-ago quarter's decline of 16.2%. In the U.S. franchised units, comps climbed 4.8% versus the year-ago quarter's slump of 4.7%.
Image Source: Zacks Investment Research
Brinker is one of the few fast-casual restaurant chains that have been expanding despite sluggish economic development. Management is gearing up for international expansion as well, especially in the faster-growing emerging markets. During fiscal 2021, the company opened 18 new restaurants, including eight company-owned, and 10 total franchises. During the fiscal year, the company opened restaurants in six new locations and entered into two new arrangements, one with an existing franchise partner and another with a new franchise partner. During the first and the second quarter of fiscal 2022, the company opened four and seven restaurants, respectively. During fiscal 2022, the company anticipates opening 17-20 restaurants.
The company is investing heavily in technology-driven initiatives, like online ordering to augment sales and boost guest services. During the fiscal second quarter, Brinker initiated the rollout of two technology systems, particularly for Chili's. The company implemented a handheld system with a focus on redefining guest services. The system bolsters table coverage and prospects for earning money. The company stated that initial results have remained strong, backed by 15% higher server earnings and significant improvements in guest metrics.
The company initiated a new curbside system, thereby capitalizing on increased demand for off-premise dining. With a focus on providing a more seamless guest experience, restaurants with adopted systems have been generating 15 to 20-point improvements in guest metrics. Backed by the promising results of its technological systems, the company intends to strengthen its base to accelerate additional growth vehicles in the upcoming periods.
Key Picks
Some better-ranked stocks in the same space include BBQ Holdings, Inc. , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Dave & Buster's Entertainment, Inc. (PLAY - Free Report) . BBQ Holdings sports a Zacks Rank #1. BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have rallied 47.1% in the past year.
The Zacks Consensus Estimate for BBQ Holdings' 2022 sales and earnings per share (EPS) suggests growth of 40.9% and 66.2%, respectively, from the year-ago period's levels.
Arcos Dorados flaunts a Zacks Rank #1. Arcos Dorados has a long-term earnings growth of 31.3%. Shares of the company have risen 51.6% in the past year.
The Zacks Consensus Estimate for Arcos Dorados' 2022 sales and EPS suggests growth of 10.3% and 62.5%, respectively, from the year-ago period's levels.
Dave & Buster's carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 212%, on average. Shares of the company have declined 1.8% in the past year.
The Zacks Consensus Estimate for Dave & Buster's 2022 sales and EPS suggests growth of 24.4% and 49.3%, respectively, from the year-ago period's levels.
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Brinker (EAT) Stock Down 48% in Past Year: Is Revival Likely?
Shares of Brinker International, Inc. (EAT - Free Report) have been hit hard by the coronavirus pandemic and high costs in the past year. The stock has plunged 48.3% in the past year, compared with the industry's decline of 12.8%.
However, the company has been showing some resilience of late, with the stock gaining 2% in the past month. In the past 30 days, earnings estimates for the current quarter have increased 1% to 99 cents. The company has an impressive long-term earnings growth rate of 10%. Let's delve deeper and analyze the factors likely to drive the Zacks Rank #2 (Buy) company's performance. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Key Catalysts
Brinker has been benefiting from sales-building efforts such as streamlining the menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of a better service platform.
Chili's turnaround strategies continue to yield positive results with traffic and sales. During the second quarter, Chili's total revenues increased 16.1% year over year. The upside was primarily driven by higher dining room guest sales and traffic, the acquisition of 60 Chili's restaurants from two former franchisees and six new restaurant openings. However, this was partially offset by a fall in off-premise sales. Comps at Chili's franchised restaurants increased 17% against a decline of 9% in the year-ago quarter. The upside can be attributed to an increase in dining room sales and traffic at the company's franchise restaurants. At international franchised Chili's restaurants, the same surged 27.7% against the year-ago quarter's decline of 16.2%. In the U.S. franchised units, comps climbed 4.8% versus the year-ago quarter's slump of 4.7%.
Image Source: Zacks Investment Research
Brinker is one of the few fast-casual restaurant chains that have been expanding despite sluggish economic development. Management is gearing up for international expansion as well, especially in the faster-growing emerging markets. During fiscal 2021, the company opened 18 new restaurants, including eight company-owned, and 10 total franchises. During the fiscal year, the company opened restaurants in six new locations and entered into two new arrangements, one with an existing franchise partner and another with a new franchise partner. During the first and the second quarter of fiscal 2022, the company opened four and seven restaurants, respectively. During fiscal 2022, the company anticipates opening 17-20 restaurants.
The company is investing heavily in technology-driven initiatives, like online ordering to augment sales and boost guest services. During the fiscal second quarter, Brinker initiated the rollout of two technology systems, particularly for Chili's. The company implemented a handheld system with a focus on redefining guest services. The system bolsters table coverage and prospects for earning money. The company stated that initial results have remained strong, backed by 15% higher server earnings and significant improvements in guest metrics.
The company initiated a new curbside system, thereby capitalizing on increased demand for off-premise dining. With a focus on providing a more seamless guest experience, restaurants with adopted systems have been generating 15 to 20-point improvements in guest metrics. Backed by the promising results of its technological systems, the company intends to strengthen its base to accelerate additional growth vehicles in the upcoming periods.
Key Picks
Some better-ranked stocks in the same space include BBQ Holdings, Inc. , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Dave & Buster's Entertainment, Inc. (PLAY - Free Report)
.
BBQ Holdings sports a Zacks Rank #1. BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have rallied 47.1% in the past year.
The Zacks Consensus Estimate for BBQ Holdings' 2022 sales and earnings per share (EPS) suggests growth of 40.9% and 66.2%, respectively, from the year-ago period's levels.
Arcos Dorados flaunts a Zacks Rank #1. Arcos Dorados has a long-term earnings growth of 31.3%. Shares of the company have risen 51.6% in the past year.
The Zacks Consensus Estimate for Arcos Dorados' 2022 sales and EPS suggests growth of 10.3% and 62.5%, respectively, from the year-ago period's levels.
Dave & Buster's carries a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 212%, on average. Shares of the company have declined 1.8% in the past year.
The Zacks Consensus Estimate for Dave & Buster's 2022 sales and EPS suggests growth of 24.4% and 49.3%, respectively, from the year-ago period's levels.