Core Insights - The full-service dining and fast-casual restaurant sectors have shown resilience since 2020, despite initial setbacks due to the pandemic and ongoing inflationary pressures [3][4] - Publicly traded restaurant stocks have generally increased, with the Dow Jones US Restaurants & Bars Index up 34% over the past five years, indicating a mixed recovery in the industry [3] - Fast-casual chains like Chipotle and Cava are performing well, while dine-in focused companies face more challenges, exemplified by Darden's struggles and Red Lobster's bankruptcy [3][4] Company Performance - Brinker International, primarily through Chili's, has seen its stock double in value over the past year but recently experienced a 16% drop after missing earnings expectations [3][6] - Despite a slight sales beat of $40 million, Brinker reported a non-GAAP EPS of $1.61, which was $0.11 below estimates, reflecting high market expectations due to its recent stock performance [3][6] - Chili's reported 13.5% comparable restaurant sales growth, with a 5.9% increase in traffic, attributed to successful marketing strategies like the "Bid Smasher" burger [6][8] Market Dynamics - The restaurant market is sensitive to economic changes, with full-service dining often viewed as a luxury, leading to potential declines in consumer spending as economic pressures mount [4][8] - The competitive landscape is shifting, with many independent restaurants closing, which may provide a temporary advantage to chains like Chili's, although this growth may not be sustainable [6][8] - The overall macroeconomic outlook for the restaurant industry is turning negative, with expectations of declining consumer demand and persistent operating costs [8][9] Valuation and Outlook - Brinker International's current TTM P/E ratio is 18X, which is relatively reasonable compared to peers, but the stock may be conditionally overvalued if a consumer-driven recession occurs [8][9] - The stock's 20% short interest indicates significant market skepticism regarding its recent performance and future prospects [9] - Overall, the company is viewed as slightly bearish, with concerns that its stock price has risen too quickly relative to its fundamental improvements [9]

Global Research and Evidence Lab 14 August 2024 First Read Brinker International Inc Initial Thoughts on F4Q Results Strong F4Q sales beat, but disappointing flow-through; FY25 guidance mixed F4Q results included an adj EBITDA miss ($141.8MM vs Cons. $144.7MM), reflecting restaurant margin downside (15.2% vs. Cons. 15.5%) and higher stock-based compensation despite better than expected revenues ($1.21 BN vs Cons. $1.16 BN). Restaurant expenses were higher than expected (27.1% vs Cons. 26.7%) and G&A above C ...

Financial Data and Key Metrics - Brinker reported total revenues of $1.208 billion for Q4, with consolidated comp sales of positive 13.5% [18] - Adjusted diluted EPS for Q4 was $1.61, up from $1.39 last year [18] - Full-year adjusted EBITDA totaled $444 million, a 28% increase versus the prior year [23] - Chili's comp sales came in at positive 14.8%, driven by price (8.1%), positive mix (0.8%), and positive traffic (5.9%) [19] - Maggiano's reported 2.5% positive comp sales for Q4, driven by price (9.2%) and positive mix (2.2%), offset by negative traffic (-8.9%) [19] - Restaurant operating margin for Q4 was 15.2%, a 180 basis points improvement year-over-year [21] Business Line Performance - Chili's AUVs grew by $440,000 to $3.6 million over the past two fiscal years [5] - Chili's menu has 22% fewer items than two years ago, simplifying operations [5] - Core 4 menu items (margaritas, Chicken Crispers, burgers, and fajitas) have seen significant improvements, with margarita sales doubling over $10 price points [9] - Fajitas platform, a $200 million business, will be relaunched in Q4 with improved recipes and new menu merchandising [13] Market Performance - Chili's outperformed the industry in Q4 with 14.8% sales growth and 5.9% traffic growth, 15.6 points better than the industry on sales and 9.4 points better on traffic [12] - July sales for Chili's were in the high single digits, including positive traffic, maintaining a 13% gap to the casual dining industry in sales and 8% in traffic [24] Strategic Direction and Industry Competition - The company is focused on improving 4-wall economics through operational simplification, technology investments, and labor and facility improvements [4][6][7] - Brinker is leveraging a barbell pricing strategy to offer both value and premium options, maintaining a balance between low-price and high-price menu items [10][24] - The company plans to continue driving traffic through advertising, superior value, and food innovation, with a focus on the Big Smasher and fajitas relaunch in FY25 [13][16] Management Commentary on Operating Environment and Future Outlook - Management highlighted the success of the turnaround strategy, with significant improvements in guest experience and operational efficiency [4][8] - The company expects FY25 annual revenues in the range of $4.55 billion to $4.62 billion, with adjusted diluted EPS in the range of $4.35 to $4.75 [25] - Wage rate inflation is expected in the mid-single digits, and commodity inflation in the low-single digits [25] Other Important Information - The company has made significant investments in technology, including Ziosk pay-at-the-table technology and AI labor forecasting, which have improved reliability and reduced errors [7] - Brinker has also invested in labor and facilities, leading to record food grade scores and improved guest experience [8] - The company plans to remove curbside service by the end of Q1 to streamline off-premise business execution [15] Q&A Session Summary Question: Chris O'Cull (Stifel) - Margin pressure in FY25 guidance - The margin pressure is driven by wage rate inflation, commodity inflation, and incremental investments in labor ($15M-$20M) and media ($15M-$18M) [27] Question: Dennis Geiger (UBS) - Top line outlook for FY25 - The company expects mid-single-digit same-store sales growth, with pricing in the 4%-5% range and traffic flat to slightly positive [32] - The company has baked in a 4%-5% decline in industry traffic into its assumptions [33] Question: Jeffrey Bernstein (Barclays) - Competitive environment and consumer stickiness - The company is seeing new guests return, with 18% of guests eating on the $10.99 tier and 80% on full-price menu items [40] - The barbell pricing strategy is working, with no evidence of overpricing on the regular menu [44] Question: David Palmer (Evercore ISI) - Restaurant expenses and $10.99 strategy - Restaurant repairs were up $16M year-over-year, and advertising was up $14M [47] - The company plans to refresh the $10.99 message with new product news in the back half of FY25 [50][52] Question: Andrew Strelzik (BMO) - Listening sessions and traffic growth - The company is focusing on empowering restaurant teams to raise the bar on performance and guest experience [54] - Traffic growth is broad-based across all demographics, with the company winning market share [57] Question: Jeff Farmer (Gordon Haskett) - Restaurant-level margin and G&A - The company expects 30-50 basis points of ROM improvement in FY25 [58] - G&A is expected to increase by $5M-$7M due to ERP system transition and team growth [59] Question: Brian Vaccaro (Raymond James) - TikTok and influencer marketing - The company attributes 60% of May's performance to advertising and 40% to TikTok going viral [63] - The company has increased investment in TikTok and influencer marketing, driving younger consumers to Chili's [66][68] Question: John Ivankoe (JPMorgan) - Advertising and CapEx - The company is increasing advertising spend but has baked in a 4%-5% industry traffic decline, which could limit profitability upside [71] - CapEx for FY25 will be similar to FY24, with a shift from R&M to reimage spending and new restaurant development [73] Question: Eric Gonzalez (KeyBanc) - Recent trends and capital allocation - The company did not delay marketing windows and saw a tail effect from previous advertising [78] - Capital allocation for FY25 will focus on investing in the business, paying down debt, and share buybacks to offset dilution [81] Question: Brian Mullan (Piper Sandler) - Development and Maggiano's priorities - The company plans to open 10-12 new Chili's restaurants in FY25, with potential to accelerate to 15 [83] - Maggiano's is focusing on simplifying operations and elevating the guest experience, with new food and beverage innovation coming in September [85][87]

Brinker International (EAT) shares were down over -14% this morning after posting mixed results for its fiscal fourth quarter. Still, Brinker's stock is sitting on +60% gains this year as the operator of Chili's Bar & Grill and Maggiano's Little Italy. Considering its stellar year-to-date performance, investors may be wondering if the post-earnings dip is a buying opportunity. To that point, Brinker has vastly outperformed the broader indexes and the Zacks RetailRestaurants Market including two of its top i ...

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all. That's because, these stocks usually carry above-average risk and volatility. In fact, betting on a stock for which the growth story is actually over or nearing its end could lead to significant loss. However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which look ...

Financial Performance - Brinker International reported a 13 5% year-over-year increase in same-store sales for Q4 2024, driven by a 6% jump in restaurant traffic and price increases [2] - Full-year revenue reached $4 4 billion, up nearly 7% from fiscal 2023 [2] - Adjusted diluted EPS for the full year was $4 10, below analyst expectations, and management forecasts a maximum of $4 75 for fiscal 2025, also below expectations [3] Stock Performance - Brinker's stock dropped approximately 13% following the earnings report, despite strong financial metrics [1] - Prior to the Q4 report, the stock had risen roughly 60% year-to-date, significantly outperforming the S&P 500 [4] - The stock currently trades at about 13 times its forward adjusted profit expectations, which is considered reasonable [5] Business Outlook - Brinker is viewed as a modestly growing, mature business, making its recent stock gains somewhat unexpected [4] - The company's ability to sustain higher revenue through increased menu prices, as seen in fiscal 2024, may not be sustainable in the long term [5] - Continued strong restaurant traffic could provide upside potential for the stock in future quarters and years [5]

Brinker International Today EAT Brinker International $61.50 -8.90 (-12.64%) 52-Week Range $28.23 ▼ $76.02 P/E Ratio 18.25 Price Target $57.34 Add to Watchlist Brinker International's NYSE: EAT stock price fell 15% following its Q4 release, which presented an appetizing dip for investors to snack on. Weaker-than-expected earnings and softer-than-expected guidance caused the dip, but that is the worst news to be found. The remaining details prove the company's strategy is working. Brinker International is gr ...

Key Takeaways Brinker International shares sank in intraday trading Wednesday after it missed fourth-quarter earnings estimates and its full-year guidance fell short as expenses rose. The parent of Chili's and Maggiano's reported operating costs and expenses were up 11.7% year-overyear. Brinker posted better-than-expected revenue and same-store sales. Brinker International (EAT) shares sank in intraday trading Wednesday after rising costs took a bite out of the the restaurant chain operator's profit and ear ...

Brinker International, Inc. (EAT) reported mixed fourth-quarter fiscal 2024 results, with earnings missing the Zacks Consensus Estimate but revenues beating the same. However, the top and the bottom lines increased on a year-over-year basis. Following the mixed results, the stock declined 12% in the pre-market trading session on Aug 14. Earnings & Revenue Discussion In the quarter under review, Brinker reported adjusted earnings per share (EPS) of $1.61, missing the Zacks Consensus Estimate of $1.65. The co ...

Brinker International (EAT) reported $1.21 billion in revenue for the quarter ended June 2024, representing a year-over-year increase of 12.3%. EPS of $1.61 for the same period compares to $1.39 a year ago. The reported revenue represents a surprise of +4.33% over the Zacks Consensus Estimate of $1.16 billion. With the consensus EPS estimate being $1.65, the EPS surprise was -2.42%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wa ...