Brinker topped earnings and revenue expectations and raised full-year guidance as Chili's continues to outperform a sluggish restaurant sector. ...

Core Insights - Brinker International reported quarterly earnings of $2.87 per share, exceeding the Zacks Consensus Estimate of $2.53 per share, and showing a slight decrease from $2.8 per share a year ago [1] - The earnings surprise was +13.39%, and the company has consistently surpassed consensus EPS estimates over the last four quarters [2] Financial Performance - The company posted revenues of $1.45 billion for the quarter, surpassing the Zacks Consensus Estimate by 3.44%, compared to $1.36 billion in the same quarter last year [3] - Brinker International has also exceeded consensus revenue estimates in each of the last four quarters [3] Stock Performance - Since the beginning of the year, Brinker International shares have increased by approximately 9.6%, outperforming the S&P 500's gain of 1.9% [4] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for it to outperform the market in the near future [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $2.89, with expected revenues of $1.47 billion, and for the current fiscal year, the estimates are $10.38 EPS on $5.73 billion in revenues [8] - The outlook for the industry, particularly the Retail - Restaurants sector, is currently in the bottom 19% of Zacks industries, which may impact stock performance [9]

Company News - ASML's ADRs rose 5% after reporting orders significantly exceeding investor expectations, driven by increased demand for AI computing workloads [3][5][17] - Seagate's stock increased by 8% following a strong second-quarter earnings report that surpassed expectations, along with a positive outlook [3] - Texas Instruments gained 7% after providing a favorable outlook, indicating improved demand in industrial and data center markets [3] - AT&T's shares rose 3% after reporting fourth-quarter profit and revenue that exceeded analysts' estimates, attributed to strong broadband subscriber growth [3] - C3.ai's stock surged 15% amid reports of merger talks with Automation Anywhere [3] - F5 Inc. jumped 8% after raising its revenue forecast for the fiscal year [3] - New Oriental Education's ADRs rose 6% after beating second-quarter estimates and increasing its annual net revenue forecast [3] - Corning's shares fell 3% after reporting fourth-quarter results and providing a disappointing outlook [3] - Elevance Health dropped 6% after giving an adjusted profit forecast for 2026 that fell short of Wall Street expectations [3] - Qorvo's stock fell 10% after issuing a weaker-than-expected outlook [3] Industry Trends - The tech sector is experiencing a rally, driven by strong earnings from semiconductor and memory companies, which is boosting the AI trade [1][4][6] - The Magnificent Seven stocks are mostly higher, with Nvidia, Alphabet, and Amazon showing gains, while Meta and Apple experienced slight declines [3] - The semiconductor, memory, and storage sectors are seeing significant gains due to positive earnings reports, particularly from ASML, Seagate, and Texas Instruments [3][4] - Asian equities are also benefiting from the tech rally, with notable gains in TSMC and SK Hynix [5][13] - The demand for AI memory is driving earnings growth for companies like SK Hynix, indicating a strong market for AI-related technologies [5][14]

Financial Performance - Total revenues for Q2 FY2026 were $1.452 billion, up from $1.358 billion in Q2 FY2025, reflecting a variance of $94 million[3]. - Net income for Q2 FY2026 increased to $128.5 million, compared to $118.5 million in Q2 FY2025, marking a growth of $10 million[3]. - Net income for the twenty-six week period ended December 24, 2025, was $228.0 million, compared to $157.0 million for the same period in 2024, reflecting a year-over-year increase of 45.2%[26]. - Basic net income per share for the thirteen-week period ended December 24, 2025, was $2.92, up from $2.67 in the prior year, marking an increase of 9.3%[21]. - Net income for Q2 26 was $128.5 million, up from $118.5 million in Q2 25, indicating an increase of 8%[38]. - The company reported a year-to-date net income of $228.0 million for Q2 26, compared to $157.0 million in Q2 25, an increase of 45%[38]. Sales Growth - Chili's achieved a 2-year comparable sales growth of +43% and a 7.5% increase in company comparable restaurant sales for Q2 FY2026, with Chili's specifically growing by 8.6%[2][4]. - Comparable restaurant sales for company-owned restaurants increased by 7.5% for Q2 2026 compared to Q2 2025, with Chili's domestic showing an increase of 8.6%[30]. - Chili's franchisees generated sales of approximately $271.9 million in Q2 FY2026, compared to $232.3 million in Q2 FY2025[15]. - Franchise revenues for Q2 26 were $13.2 million, up from $11.9 million in Q2 25, reflecting a growth of 11%[34]. Operating Income - Operating income for the twenty-six week period ended December 24, 2025, was $286.3 million, compared to $212.4 million for the same period in 2024, representing a 34.7% increase[21]. - Chili's operating income for Q2 26 was $200.0 million, up from $175.1 million in Q2 25, representing an increase of 14%[34]. - Maggiano's operating income for Q2 26 was $15.0 million, compared to $28.2 million in Q2 25, reflecting a decrease of 46%[34]. Guidance and Projections - Full year FY2026 revenue guidance has been raised to $5.76 billion - $5.83 billion, up from the previous guidance of $5.60 billion - $5.70 billion[7]. - Net income per diluted share guidance, excluding special items, has been increased to $10.45 - $10.85 from $9.90 - $10.50[7]. - The company plans to open 32-38 new franchise restaurants in the fiscal year, with 24-28 of those being Chili's international locations[29]. Expenses and Liabilities - Interest expenses decreased to $10.7 million in Q2 26 from $14.7 million in Q2 25, a reduction of 27%[38]. - Depreciation and amortization increased to $54.6 million in Q2 26 from $47.7 million in Q2 25, a rise of 14%[38]. - The company reported total current liabilities of $669.7 million as of December 24, 2025, a slight decrease from $675.6 million in the previous period[23]. Cash Flow and Assets - Cash flows from operating activities for the twenty-six week period ended December 24, 2025, were $339.7 million, compared to $281.0 million for the same period in 2024, indicating a 20.8% increase[26]. - Total assets as of December 24, 2025, were $2,749.2 million, up from $2,678.6 million as of June 25, 2025, reflecting a growth of 2.6%[23]. Tax and External Factors - The effective income tax rate for Q2 FY2026 was 18.7%, lower than the statutory rate of 21.0% due to the leverage of the FICA tip credit[11]. - The company anticipates a negative impact of approximately $20 million in revenues and a decrease of $0.15 in net income per diluted share due to Winter Storm Fern[6]. Restaurant Operations - The total number of company-owned restaurants as of December 24, 2025, was 1,160, a decrease from 1,164 in the previous year, with projected openings of 6 for the full fiscal year[29]. - The non-GAAP restaurant operating margin for Chili's was 19.1% in Q2 26, an increase from 18.7% in Q2 25[34]. - Adjusted EBITDA for Q2 26 was $223.5 million, compared to $215.8 million in Q2 25, showing a growth of 4%[38]. - The company emphasizes that restaurant operating margin is a useful metric for evaluating restaurant-level operating efficiency, despite being a non-GAAP measure[35].

Core Insights - Brinker International, Inc. reported strong financial results for the second quarter of fiscal 2026, with Chili's achieving industry-leading growth of +9% and a two-year comparable sales growth of +43% [2][3] - The company experienced a 7.5% increase in comparable restaurant sales, with Chili's specifically seeing an 8.6% increase, while Maggiano's faced a decline of 2.4% [4][7] - The company has raised its full-year fiscal 2026 guidance, reflecting a stronger sales and profit outlook despite the negative impact from Winter Storm Fern, which resulted in approximately $20 million in reduced revenues [5][6] Financial Performance - Company sales for Q2 fiscal 2026 reached $1,438.8 million, up from $1,346.1 million in Q2 fiscal 2025, marking a variance of $92.7 million [3][21] - Total revenues increased to $1,452.2 million from $1,358.2 million, with an operating income of $168.4 million compared to $156.0 million in the previous year [3][21] - Net income rose to $128.5 million, or $2.86 per diluted share, compared to $118.5 million, or $2.61 per diluted share, in Q2 fiscal 2025 [3][21] Segment Performance - Chili's company sales increased to $1,304.1 million from $1,196.9 million, while Maggiano's sales decreased to $149.2 million from $134.7 million [7][21] - Chili's operating income was $200.0 million, with an operating margin of 15.2%, while Maggiano's operating income was $15.0 million, with an operating margin of 11.1% [7][32] - Franchise revenues for Chili's reached approximately $271.9 million, up from $232.3 million in the same quarter last year [10] Guidance and Future Outlook - The updated fiscal 2026 guidance includes total revenues projected between $5.76 billion and $5.83 billion, and net income per diluted share expected to be between $10.45 and $10.85 [6] - Capital expenditures are now expected to be between $250 million and $260 million, down from the previous estimate of $270 million to $290 million [6] - The company anticipates a total of 32 to 38 new restaurant openings for the fiscal year, with a focus on both company-owned and franchise locations [25]

Core Insights - Brinker International, Inc. (EAT) is set to report its second-quarter fiscal 2026 results on January 28, with expectations of revenue growth driven by strong performance at Chili's and increased guest traffic [1][8] Revenue Expectations - The Zacks Consensus Estimate for fiscal second-quarter EPS remains at $2.51, reflecting a decline of 10.4% from the previous year's $2.80, while revenue is projected at $1.4 billion, indicating a growth of 3.1% year-over-year [2] - Fiscal second-quarter revenues are anticipated to rise, supported by effective marketing, brand-building initiatives, and improvements in food quality and service, which are expected to enhance repeat visitation [3] - Chili's revenues are expected to grow by 3.9% year-over-year to $1.26 billion, while Maggiano's revenues are estimated to decrease by 7.4% to $138.3 million [5] Margin Analysis - Margin performance may be constrained by declining results at Maggiano's and mid-single-digit commodity inflation, particularly due to tariffs on beef and ground beef, leading to increased food and beverage costs [6] - Wage inflation of approximately 3.8% and rising costs associated with staffing and workers' compensation are also expected to pressure margins [6] - Despite these challenges, strong performance at Chili's and strategic pricing initiatives may help support margin resilience, with total operating costs predicted to increase by 4.5% year-over-year to $1.24 billion [7] Earnings Prediction - The current model does not predict an earnings beat for Brinker International, as the company has an Earnings ESP of 0.00% and a Zacks Rank of 2 (Buy) [9][10]

Core Viewpoint - Analyst recommendations play a significant role in influencing stock prices, but their reliability is questionable due to potential biases from brokerage firms [1][5][11]. Brokerage Recommendations for Brinker International - Brinker International (EAT) has an average brokerage recommendation (ABR) of 1.72, indicating a consensus between Strong Buy and Buy, based on 23 brokerage firms [2]. - Out of the 23 recommendations, 14 are classified as Strong Buy, accounting for 60.9%, while one is classified as Buy, making up 4.4% of the total recommendations [2]. Limitations of Brokerage Recommendations - Solely relying on ABR for investment decisions may not be prudent, as studies indicate limited success in guiding investors towards stocks with the highest price increase potential [5]. - Brokerage analysts often exhibit a positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell [6][11]. Zacks Rank as an Alternative - The Zacks Rank, which categorizes stocks from 1 (Strong Buy) to 5 (Strong Sell), is presented as a more reliable indicator of near-term price performance, driven by earnings estimate revisions [8][12]. - The Zacks Rank is updated more frequently than ABR, reflecting timely changes in earnings estimates, which are closely correlated with stock price movements [13]. Current Earnings Estimates for Brinker International - The Zacks Consensus Estimate for Brinker International's earnings has increased by 0.2% over the past month to $10.24, indicating growing optimism among analysts regarding the company's earnings prospects [14]. - The recent change in consensus estimates, along with other factors, has resulted in a Zacks Rank of 2 (Buy) for Brinker International, suggesting that the Buy-equivalent ABR may be a useful guide for investors [15].

Core Viewpoint - Morgan Stanley upgraded Brinker International's stock rating to "Overweight" from "Underweight," indicating a more favorable outlook on the company's future performance [1][6]. Group 1: Stock Performance - At the time of the upgrade, EAT's stock price was $157.68, reflecting a decrease of 5.42% or $9.03 [2]. - EAT's stock has shown significant fluctuations, with a daily range between $157.34 and $167, and over the past year, it reached a high of $192.22 and a low of $100.30 [4]. - The trading volume for EAT is 1,374,875 shares on the NYSE, indicating active investor interest [5]. Group 2: Market Position and Ratings - Brinker International is recognized as a significant player in the casual dining industry, with a market capitalization of approximately $7 billion [4][6]. - Zacks Investment Research highlights Brinker as a top-ranked value stock, suggesting it could be a promising addition to investment portfolios [3]. - The recent upgrade by Morgan Stanley and recognition by Zacks may bolster investor confidence in Brinker's future prospects [5][6].

Upgrades Summary - Melius Research upgraded Wingstop (WING) to Buy from Hold with a price target of $350, increased from $275, citing an attractive entry point after recent stock weakness [2] - Seaport Research upgraded Intel (INTC) to Buy from Neutral with a price target of $65, indicating that new Panther Lakes products are expected to drive near-term improvements and market share recovery in enterprise and consumer products [2] - HSBC also upgraded Intel to Hold from Reduce with a price target of $50, up from $26 [2] - Wolfe Research upgraded Allegiant Travel (ALGT) to Outperform from Peer Perform with a price target of $108, following its acquisition of Sun Country Airlines (SNCY), described as "transformational" [2] - Wells Fargo upgraded Doximity (DOCS) to Overweight from Equal Weight with a price target of $55, down from $65, suggesting that investor concerns are overblown based on survey results indicating sufficient differentiation [2] - Morgan Stanley upgraded Brinker (EAT) to Overweight from Equal Weight with a price target of $200, increased from $160, highlighting attractive long-term growth in fast casual and beverage sectors [2] - Morgan Stanley also upgraded Shake Shack (SHAK) to Overweight from Equal Weight with a price target of $125, up from $115 [2]

Group 1 - Top Wall Street analysts have revised their outlook on several prominent companies, indicating a shift in market sentiment [1] - The article suggests that investors should consider the stock of Intel Corporation (INTC), highlighting the importance of analyst opinions in investment decisions [1]