We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Brinker International (EAT) Up 0.7% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Brinker International (EAT - Free Report) . Shares have added about 0.7% in that time frame, underperforming 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 catalysts.
Brinker's Q2 Earnings Beat Estimates, Revenues Lag
Brinker reported second-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis. During the quarter, the company registered benefits from effective marketing and pricing strategies. It also reported sequential improvements in guest traffic, surpassing industry benchmarks.
Earnings & Revenue Discussion
In the quarter under review, Brinker reported adjusted earnings per share (EPS) of 99 cents, surpassing the Zacks Consensus Estimate of a loss of $1.47. The company reported an adjusted EPS of 76 cents per share in the prior-year quarter.
In the fiscal second quarter, total revenues of $1.07 billion missed the Zacks Consensus Estimate of $1.08 billion. The top line increased 5.4% on a year-over-year basis. EAT gained from the solid performance of Chili's.
Chili's
During the fiscal second quarter, revenues in the Chili’s segment rose 5.5% year over year to $927.2 million. The upside was primarily driven by increased menu pricing. However, this was partially offset by lower traffic and an unfavorable menu item mix. Our model predicted segmental revenues at $919.7 million.
Chili's restaurant expenses (as a percentage of company sales) in the fiscal second quarter were 88.4% compared with 89.7% in the prior-year quarter. The downside was caused by sales leverage, menu pricing, favorable commodity mix, lower delivery and to-go supplies. A rise in advertising and hourly labor expenses partially offset this.
Chili's company-owned traffic declined 0.6% year over year in the quarter. The metric fell 7.6% in the prior-year quarter.
The segment’s company-owned comps jumped 5% in the fiscal second quarter from the year-ago levels.
At Chili’s, domestic comps (including company-owned and franchised) rose 5.1% year over year compared with 7.5% in the prior year.
Maggiano’s
Maggiano’s sales in the fiscal second quarter increased 4.7% year over year to $146.9 million. The upside was primarily driven by favorable comparable restaurant sales, courtesy of increased menu pricing and favorable menu item mix. Comps in the segment rose 6.7% year over year. Our projection was 8.3%.
Traffic in the quarter fell 4.2% year over year. The metric was up 8.4% in the prior-year quarter.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal second quarter were 77.1% compared with 80.1% a year ago. Menu pricing, sales leverage and favorable commodity costs resulted in this downside.
Operating Results
During the quarter, total operating costs and expenses came in at $1.01 billion compared with $0.9 billion reported in the year-ago quarter. Adjusted operating margin, as a percentage of company sales, was 13.1% compared with 11.6% reported in the prior-year quarter.
Balance Sheet
As of Dec 27, 2023, cash and cash equivalents amounted to $22.7 million compared with $14.7 million as of Dec 28, 2022.
As of Dec 27, 2023, long-term debt was $882.4 million compared with $912.2 million as of Jun 28, 2023. Total shareholders’ deficit in the reported quarter was ($109.5) million compared with ($156.3) million in the previous quarter.
Fiscal 2024 Outlook
In fiscal 2024, management anticipates total revenues to be in the range of $4.3-$4.35 billion. Capital expenditures are expected in the $175-$195 million band. EAT projects fiscal 2024 EPS in the range of $3.45-$3.7, up from the prior estimate of $3.35-$3.65.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
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 an F. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Brinker International has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Brinker International belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, Starbucks (SBUX - Free Report) , has gained 1.6% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Starbucks reported revenues of $9.43 billion in the last reported quarter, representing a year-over-year change of +8.2%. EPS of $0.90 for the same period compares with $0.75 a year ago.
Starbucks is expected to post earnings of $0.83 per share for the current quarter, representing a year-over-year change of +12.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -4.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Starbucks. Also, the stock has a VGM Score of B.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Brinker International (EAT) Up 0.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Brinker International (EAT - Free Report) . Shares have added about 0.7% in that time frame, underperforming 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 catalysts.
Brinker's Q2 Earnings Beat Estimates, Revenues Lag
Brinker reported second-quarter fiscal 2024 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis. During the quarter, the company registered benefits from effective marketing and pricing strategies. It also reported sequential improvements in guest traffic, surpassing industry benchmarks.
Earnings & Revenue Discussion
In the quarter under review, Brinker reported adjusted earnings per share (EPS) of 99 cents, surpassing the Zacks Consensus Estimate of a loss of $1.47. The company reported an adjusted EPS of 76 cents per share in the prior-year quarter.
In the fiscal second quarter, total revenues of $1.07 billion missed the Zacks Consensus Estimate of $1.08 billion. The top line increased 5.4% on a year-over-year basis. EAT gained from the solid performance of Chili's.
Chili's
During the fiscal second quarter, revenues in the Chili’s segment rose 5.5% year over year to $927.2 million. The upside was primarily driven by increased menu pricing. However, this was partially offset by lower traffic and an unfavorable menu item mix. Our model predicted segmental revenues at $919.7 million.
Chili's restaurant expenses (as a percentage of company sales) in the fiscal second quarter were 88.4% compared with 89.7% in the prior-year quarter. The downside was caused by sales leverage, menu pricing, favorable commodity mix, lower delivery and to-go supplies. A rise in advertising and hourly labor expenses partially offset this.
Chili's company-owned traffic declined 0.6% year over year in the quarter. The metric fell 7.6% in the prior-year quarter.
The segment’s company-owned comps jumped 5% in the fiscal second quarter from the year-ago levels.
At Chili’s, domestic comps (including company-owned and franchised) rose 5.1% year over year compared with 7.5% in the prior year.
Maggiano’s
Maggiano’s sales in the fiscal second quarter increased 4.7% year over year to $146.9 million. The upside was primarily driven by favorable comparable restaurant sales, courtesy of increased menu pricing and favorable menu item mix. Comps in the segment rose 6.7% year over year. Our projection was 8.3%.
Traffic in the quarter fell 4.2% year over year. The metric was up 8.4% in the prior-year quarter.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal second quarter were 77.1% compared with 80.1% a year ago. Menu pricing, sales leverage and favorable commodity costs resulted in this downside.
Operating Results
During the quarter, total operating costs and expenses came in at $1.01 billion compared with $0.9 billion reported in the year-ago quarter. Adjusted operating margin, as a percentage of company sales, was 13.1% compared with 11.6% reported in the prior-year quarter.
Balance Sheet
As of Dec 27, 2023, cash and cash equivalents amounted to $22.7 million compared with $14.7 million as of Dec 28, 2022.
As of Dec 27, 2023, long-term debt was $882.4 million compared with $912.2 million as of Jun 28, 2023. Total shareholders’ deficit in the reported quarter was ($109.5) million compared with ($156.3) million in the previous quarter.
Fiscal 2024 Outlook
In fiscal 2024, management anticipates total revenues to be in the range of $4.3-$4.35 billion. Capital expenditures are expected in the $175-$195 million band. EAT projects fiscal 2024 EPS in the range of $3.45-$3.7, up from the prior estimate of $3.35-$3.65.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
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 an F. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Brinker International has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Brinker International belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, Starbucks (SBUX - Free Report) , has gained 1.6% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Starbucks reported revenues of $9.43 billion in the last reported quarter, representing a year-over-year change of +8.2%. EPS of $0.90 for the same period compares with $0.75 a year ago.
Starbucks is expected to post earnings of $0.83 per share for the current quarter, representing a year-over-year change of +12.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -4.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Starbucks. Also, the stock has a VGM Score of B.