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Brinker International (EAT) Up 24.8% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Brinker International (EAT - Free Report) . Shares have added about 24.8% 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 its most recent earnings report in order to get a better handle on the important drivers.
Brinker Q3 Earnings & Revenues Top Estimates
Brinker reported stellar third-quarter fiscal 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. During the quarter, the company’s performance was backed by sustained advancements in enhancing the guest experience, effective marketing strategies and traffic-driving initiatives.
Earnings & Revenue Discussion
In the quarter under review, Brinker reported adjusted earnings per share (EPS) of $1.24, surpassing the Zacks Consensus Estimate of $1.15. The company reported an adjusted EPS of $1.23 in the prior-year quarter.
In the fiscal third quarter, total revenues of $1.12 billion outpaced the consensus mark of $1.11 billion. The top line increased 3.4% on a year-over-year basis. EAT gained from the solid performance of Chili's.
Chili's
During the fiscal third quarter, revenues in the Chili’s segment rose 3.8% year over year to $999.6 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 $995.7 million.
Chili's restaurant expenses (as a percentage of company sales) in the fiscal third quarter were 85.9% compared with 86.8% in the prior-year quarter. The downside was caused by sales leverage, menu pricing, favorable commodity mix, lower delivery fees and to-go supplies. A rise in advertising and hourly labor expenses partially offset this.
Chili's company-owned traffic declined 1.8% year over year in the quarter. The metric fell 5.8% in the prior-year quarter.
The segment’s company-owned comps rose 3.5% in the fiscal third quarter from the year-ago quarter’s levels.
At Chili’s, domestic comps (including company-owned and franchised) rose 3.6% year over year compared with 9.1% growth reported in the prior-year period.
Maggiano’s
Maggiano’s sales in the fiscal third quarter increased 0.8% year over year to $120.7 million. Favorable comparable restaurant sales, courtesy of increased menu pricing and favorable menu item mix, primarily drove the upside. Comps in the segment rose 1.7% year over year. Our projection was 2.1%.
Traffic in the quarter fell 7.5% year over year. The metric was up 9.5% in the prior-year quarter.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal third quarter were 85% compared with 85.1% a year ago. The downside was caused by menu pricing partially offset by increased repairs and maintenance expenses.
Operating Results
During the quarter, total operating costs and expenses came in at $1.05 billion compared with $1.02 billion reported in the year-ago quarter. Adjusted operating margin, as a percentage of company sales, was 14.2% compared with 13.4% reported in the prior-year quarter.
Adjusted EBITDA during the fiscal third quarter came in at $122.4 million compared with $113 million reported in the prior-year quarter.
Balance Sheet
As of Mar 27, 2024, cash and cash equivalents amounted to $15.5 million compared with $13.8 million as of Mar 29, 2023.
As of Mar 27, 2024, long-term debt was $818.5 million compared with $912.2 million as of Jun 28, 2023. Total shareholders’ deficit in the reported quarter was ($46.7) million compared with ($109.5) million in the previous quarter.
Fiscal 2024 Outlook
In the fiscal 2024, management anticipates total revenues to be in the range of $4.3-$4.35 billion. Capital expenditures are expected in the $185-$195 million band. EAT projects fiscal 2024 EPS in the range of $3.8-$4, up from the prior estimate of $$3.45-$3.7.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 10.9% due to these changes.
VGM Scores
Currently, Brinker International has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Brinker International has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Brinker International (EAT) Up 24.8% 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 24.8% 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 its most recent earnings report in order to get a better handle on the important drivers.
Brinker Q3 Earnings & Revenues Top Estimates
Brinker reported stellar third-quarter fiscal 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. During the quarter, the company’s performance was backed by sustained advancements in enhancing the guest experience, effective marketing strategies and traffic-driving initiatives.
Earnings & Revenue Discussion
In the quarter under review, Brinker reported adjusted earnings per share (EPS) of $1.24, surpassing the Zacks Consensus Estimate of $1.15. The company reported an adjusted EPS of $1.23 in the prior-year quarter.
In the fiscal third quarter, total revenues of $1.12 billion outpaced the consensus mark of $1.11 billion. The top line increased 3.4% on a year-over-year basis. EAT gained from the solid performance of Chili's.
Chili's
During the fiscal third quarter, revenues in the Chili’s segment rose 3.8% year over year to $999.6 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 $995.7 million.
Chili's restaurant expenses (as a percentage of company sales) in the fiscal third quarter were 85.9% compared with 86.8% in the prior-year quarter. The downside was caused by sales leverage, menu pricing, favorable commodity mix, lower delivery fees and to-go supplies. A rise in advertising and hourly labor expenses partially offset this.
Chili's company-owned traffic declined 1.8% year over year in the quarter. The metric fell 5.8% in the prior-year quarter.
The segment’s company-owned comps rose 3.5% in the fiscal third quarter from the year-ago quarter’s levels.
At Chili’s, domestic comps (including company-owned and franchised) rose 3.6% year over year compared with 9.1% growth reported in the prior-year period.
Maggiano’s
Maggiano’s sales in the fiscal third quarter increased 0.8% year over year to $120.7 million. Favorable comparable restaurant sales, courtesy of increased menu pricing and favorable menu item mix, primarily drove the upside. Comps in the segment rose 1.7% year over year. Our projection was 2.1%.
Traffic in the quarter fell 7.5% year over year. The metric was up 9.5% in the prior-year quarter.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal third quarter were 85% compared with 85.1% a year ago. The downside was caused by menu pricing partially offset by increased repairs and maintenance expenses.
Operating Results
During the quarter, total operating costs and expenses came in at $1.05 billion compared with $1.02 billion reported in the year-ago quarter. Adjusted operating margin, as a percentage of company sales, was 14.2% compared with 13.4% reported in the prior-year quarter.
Adjusted EBITDA during the fiscal third quarter came in at $122.4 million compared with $113 million reported in the prior-year quarter.
Balance Sheet
As of Mar 27, 2024, cash and cash equivalents amounted to $15.5 million compared with $13.8 million as of Mar 29, 2023.
As of Mar 27, 2024, long-term debt was $818.5 million compared with $912.2 million as of Jun 28, 2023. Total shareholders’ deficit in the reported quarter was ($46.7) million compared with ($109.5) million in the previous quarter.
Fiscal 2024 Outlook
In the fiscal 2024, management anticipates total revenues to be in the range of $4.3-$4.35 billion. Capital expenditures are expected in the $185-$195 million band. EAT projects fiscal 2024 EPS in the range of $3.8-$4, up from the prior estimate of $$3.45-$3.7.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 10.9% due to these changes.
VGM Scores
Currently, Brinker International has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Brinker International has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.