Core Insights - Brinker International's stock price has decreased by approximately 18%, primarily due to challenges in the industry linked to a weakening US consumer who is reducing discretionary spending, which is negatively impacting dining out [1] Company Summary - Brinker International (EAT) is experiencing significant stock price volatility, attributed to broader economic conditions affecting consumer behavior [1] Industry Summary - The dining industry is facing headwinds as US consumers are pulling back on discretionary spending, leading to a decline in dining out [1]

Core Insights - Brinker International Inc. (NYSE:EAT) has experienced a price increase of 0.66% in the current market session, with a current price of $102.97. However, the stock has declined by 17.54% over the past month and 12.45% over the past year, raising questions about its valuation despite current performance [1]. Group 1: P/E Ratio Analysis - The P/E ratio is a critical metric for long-term shareholders to evaluate a company's market performance relative to historical earnings and industry standards [5]. - Brinker International has a P/E ratio of 10.6, which is significantly lower than the industry average P/E ratio of 42.76 in the Hotels, Restaurants & Leisure sector. This disparity may lead shareholders to believe that the stock could underperform compared to its peers, or it may indicate that the stock is undervalued [6]. - While a lower P/E ratio can suggest undervaluation, it may also reflect a lack of expected future growth from shareholders. Therefore, the P/E ratio should not be analyzed in isolation but rather in conjunction with other financial metrics and qualitative factors [9].

Core Insights - Steven Cress is the Head of Quantitative Strategies at Seeking Alpha, managing quant ratings and factor grades for stocks and ETFs [1] - He leads Alpha Picks, a monthly selection of two attractive stocks to buy and determines when to sell them [1] Company Overview - Seeking Alpha's quantitative stock rating system, created by Steven Cress, interprets data for investors and offers insights on investment directions [2] - The platform aims to save time for users by providing a systematic stock recommendation tool designed for long-term investors [2] Professional Background - Steven Cress has over 30 years of experience in equity research, quantitative strategies, and portfolio management [2] - He previously founded CressCap Investment Research, which was acquired by Seeking Alpha in 2018, and also founded the quant hedge fund Cress Capital Management [2]

Company Overview - Brinker International, Inc. (NYSE:EAT) operates casual dining restaurants under the brands Chili's Grill & Bar and Maggiano's Little Italy [2] Earnings Report Reaction - Following the earnings report, Brinker’s stock experienced a significant decline, dropping 30% from its highs before the report and finishing down 7.5% on the day of the announcement [1] - Despite beating both top and bottom line expectations, the market reacted negatively due to management's comments on challenges related to tariffs and margin pressures, particularly concerning import duties on beef and shrimp [1] Market Sentiment - The stock's performance indicates a lack of confidence from investors, as the bulls found little to support their optimism, with management only reiterating the full-year forecast without providing additional positive guidance [1]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Financial Performance - Total revenues for the thirteen-week period ended September 24, 2025, were $1,349.2 million, an increase from $1,139.0 million for the same period in 2024, reflecting a growth of approximately 18.4%[71] - Comparable restaurant sales for company-owned locations increased by 18.8%, with Chili's showing a 21.4% increase, while Maggiano's experienced a decline of 6.4%[72] - Chili's total revenues increased by 21.3% to $1,249.7 million for the thirteen-week period ended September 24, 2025, primarily due to favorable comparable restaurant sales[82] - Maggiano's total revenues decreased by 8.4% to $99.5 million for the same period, primarily due to unfavorable comparable restaurant sales and restaurant closures[85] Restaurant Operations - As of September 24, 2025, the company owned, operated, or franchised a total of 1,630 restaurants, including 1,161 company-owned and 469 franchised locations[63] - The company opened 7 new restaurants during the thirteen-week period, with 5 of these being franchise locations, and plans to open 32-38 new restaurants in fiscal 2026[69] - The "3 for Me" value offering has been highlighted as a key traffic driver, allowing guests to enjoy a meal starting at $10.99[65] - The company has focused on enhancing the digital experience for guests, including a seamless To-Go menu available through various platforms[65] Cost Management - Food and beverage costs represented 25.8% of company sales, showing a slight increase from 25.2% in the previous year, primarily due to unfavorable commodity costs[75] - Restaurant labor costs decreased to 32.3% of company sales from 33.5%, benefiting from sales leverage despite higher hourly labor costs[75] Cash Flow and Financing - Net cash provided by operating activities increased by $58.0 million to $120.8 million for the thirteen-week period ended September 24, 2025, due to an increase in operating income[87] - Net cash used in investing activities increased by $1.4 million to $(57.9) million, primarily due to increased spending on new restaurant construction and Maggiano's reimages[88] - Net cash used in financing activities decreased by $6.5 million to $(48.2) million, primarily due to an increase in net borrowings of long-term debt[90] - As of September 24, 2025, the company had $910.0 million available under its $1.0 billion revolving credit facility[91] - The company is focusing on cash flow generation and maintaining a solid financial position amid macroeconomic uncertainties, including commodity and labor inflation[96] - Current cash and cash equivalents, along with cash generated from operations, are expected to meet capital expenditure and working capital needs for at least the next twelve months[97] Shareholder Returns - The Board of Directors approved a $400.0 million increase in the share repurchase program, bringing the total available authority to $507.0 million[94] - In the thirteen-week period ended September 24, 2025, the company repurchased 0.9 million shares for $134.5 million, with approximately $415.0 million remaining under the current share repurchase program[95] Tax and Compliance - The effective income tax rate decreased to 7.5% for the thirteen-week period ended September 24, 2025, from 9.0% in the prior year, primarily due to excess tax benefits from stock-based compensation[79][80] - The company expects to remain in compliance with its covenants under the revolving credit facility and the terms of its 8.25% notes during the remainder of fiscal 2026[93] Future Commitments and Risks - Long-term purchase obligations for marketing programs total $18.0 million in fiscal 2026, $21.2 million in fiscal 2027, $21.1 million in fiscal 2028, and $4.4 million in fiscal 2029[98] - A hypothetical 100 basis point increase in interest rates on the $90.0 million outstanding under the revolving credit facility would result in an additional $0.9 million of annual interest expense[101] - The company faces commodity price risk due to fluctuations in market prices for food and other commodities, which could negatively impact short-term financial results[102] - Depreciation and amortization increased by $7.3 million to $53.6 million for the thirteen-week period ended September 24, 2025, primarily due to additions for new and existing restaurant assets[78] - General and administrative expenses rose by $5.4 million to $57.2 million for the same period, driven by payroll expenses and corporate technology initiatives[78] International Expansion - The company plans to strategically pursue international expansion of Chili's through development agreements with new and existing franchise partners[68]

Financial Data and Key Metrics Changes - For Q1 fiscal year 2026, total revenues reached $1.35 billion, an increase of 18.5% year-over-year, with consolidated comp sales up 18.8% [16] - Adjusted diluted EPS for the quarter was $1.93, up from $0.95 last year [16] - Restaurant operating margin improved to 16.2%, a 270 basis points increase year-over-year, primarily driven by sales leverage [17] Business Line Data and Key Metrics Changes - Chili's reported same-store sales growth of 21.4%, driven by a 13.1% increase in traffic, a positive mix of 4.3%, and a price increase of 4% [16][17] - Maggiano's experienced a decline in comp sales of 6.4% for the quarter, with a focus on stabilizing and improving the brand through the "Back to Maggiano's" strategy [17] Market Data and Key Metrics Changes - Chili's outperformed the casual dining industry by 1,650 basis points in same-store sales growth [5] - The customer base for Chili's is growing across all income levels, particularly among households with incomes under $60,000, indicating a strong value proposition [9][10] Company Strategy and Development Direction - The company is focused on enhancing guest experience through food and hospitality initiatives, with successful upgrades in menu items like ribs and beverages [7][8] - A reimaging program for Chili's is underway, with four pilot restaurants expected to be completed by the end of the quarter, aiming to return to the brand's original essence [20][50] - The "Back to Maggiano's" plan includes improving service levels, focusing on guest-facing repairs, and restoring pride in ownership among management teams [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong sales growth despite economic uncertainties and anticipated commodity inflation in the mid-single digits [22] - The company expects Q2 to show moderate gains compared to the previous year due to high comparison bases, with same-store sales normalizing in the mid-single digit range for the remainder of the fiscal year [23][56] Other Important Information - The company repurchased $92 million of common stock under its share repurchase program, supporting its disciplined capital allocation strategy [20] - The adjusted tax rate for the quarter increased to 18.5%, driven by higher sales [19] Q&A Session Summary Question: How does Chili's plan to leverage tokenized consumer data to enhance engagement? - Management plans to track monthly cohorts of new guests to understand their repeat behavior and the impact of menu initiatives on guest frequency [26][27] Question: How is the value platform performing against expectations? - The value platform is performing well, with the $10.99 burger deal remaining relevant and expected to be refreshed with new innovations in Q3 and Q4 [30][32] Question: What insights can be shared about younger consumers? - Younger consumers are returning as frequently as other guests, and marketing efforts are focused on maintaining relevance with Gen Z [39][40] Question: What is the status of the food renovation journey? - The company is progressing with food renovations, including a chicken sandwich platform and plans to bring back the old skillet queso due to customer demand [42][43] Question: How is the North of Six initiative progressing? - The initiative is yielding positive results, with improvements in scheduling and operational efficiency being implemented across the system [71][74] Question: What are the expectations for Maggiano's turnaround? - The turnaround is expected to be slower than Chili's due to its smaller size and less national marketing presence, but management is optimistic about stabilizing and growing the brand [80][83]

Financial Data and Key Metrics Changes - For Q1 fiscal year 2026, total revenues reached $1.35 billion, an increase of 18.5% year-over-year, with consolidated comp sales up 18.8% [16] - Adjusted diluted EPS for the quarter was $1.93, up from $0.95 last year [16] - Restaurant operating margin improved to 16.2%, a 270 basis points increase year-over-year, primarily driven by sales leverage [17] - Adjusted EBITDA for the first quarter was approximately $172.4 million, a 54.4% increase from the prior year [19] Business Line Data and Key Metrics Changes - Chili's reported same-store sales growth of 21.4%, driven by a 13.1% increase in traffic, a 4.3% positive mix, and a 4% price increase [16] - Maggiano's experienced a decline in comp sales of -6.4% for the quarter [17] Market Data and Key Metrics Changes - Chili's outperformed the casual dining industry by 1,650 basis points in same-store sales growth [5] - The customer base for Chili's is growing across all income levels, with the fastest growth seen in households earning under $60,000 [9] Company Strategy and Development Direction - The company is focusing on stabilizing and improving Maggiano's through the "Back to Maggiano's" strategy, which emphasizes classic recipes, improved service, and guest-facing repairs [12][14] - Chili's is ramping up its reimage program and expects to complete four remodel pilot restaurants by the end of the quarter [20] - The company aims to return to positive net new unit growth for Chili's and stabilize Maggiano's performance [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to maintain strong sales growth despite economic uncertainties and anticipated higher commodity inflation [22] - The first quarter is expected to be the strongest year-over-year, with more moderate gains anticipated in subsequent quarters [23] - Management remains focused on long-term growth and strategic investments, despite challenges in the macroeconomic environment [24] Other Important Information - The company repurchased $92 million of common stock under its share repurchase program [20] - The adjusted tax rate for the quarter increased to 18.5%, driven by higher sales [19] Q&A Session Summary Question: How does Chili's plan to leverage tokenized consumer data to enhance engagement? - Management plans to track monthly cohorts of new guests to understand their repeat visitation and the impact of menu initiatives on guest frequency [26][28] Question: How is the value platform performing against expectations? - The value platform is performing well, with significant lifts observed from recent advertising campaigns, particularly the $10.99 burger deal [30][31] Question: What insights can be shared regarding younger consumers? - Younger consumers are returning as frequently as other guests, and marketing efforts are focused on maintaining relevance with this demographic [39][40] Question: What is the status of the food renovation journey? - The company is progressing with food renovations, including a chicken sandwich platform and plans to bring back the old skillet queso due to customer demand [42][43] Question: How is the North of Six initiative progressing? - The initiative is yielding positive results, with improvements in scheduling and operational efficiency being implemented across the system [71][74] Question: What are the expectations for Maggiano's turnaround compared to Chili's? - The turnaround for Maggiano's is expected to be slower due to its smaller size and less national marketing presence, but management is optimistic about stabilizing and growing the brand [80][83]

Financial Data and Key Metrics Changes - For Q1 fiscal year 2026, total revenues reached $1.35 billion, marking an 18.5% increase year-over-year, with consolidated comp sales up 18.8% [14][16] - Adjusted diluted EPS for the quarter was $1.93, a significant rise from $0.95 in the previous year [14] - Restaurant operating margin improved to 16.2%, reflecting a 270 basis points increase year-over-year, primarily driven by sales leverage [16][18] Business Line Data and Key Metrics Changes - Chili's reported same-store sales growth of 21.4%, driven by a 13.1% increase in traffic, a 4.3% positive mix, and a 4% price increase [15][16] - Maggiano's experienced a decline in comp sales of -6.4%, with a focus on stabilizing and improving the brand through the "Back to Maggiano's" strategy [16][19] Market Data and Key Metrics Changes - Chili's has outperformed the casual dining industry by 1,650 basis points in same-store sales growth [4] - The customer base for Chili's is growing across all income levels, particularly among households earning under $60,000, indicating a shift in market dynamics [8][9] Company Strategy and Development Direction - The company is ramping up its reimage program for Chili's, with four remodel pilot restaurants expected to be completed by the end of the quarter [6][19] - The "Back to Maggiano's" plan focuses on improving service levels, restoring classic recipes, and enhancing guest experience [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining strong sales growth despite anticipated challenges such as higher commodity inflation and economic uncertainty [20][21] - The company expects Q2 to be strong but anticipates that same-store sales will normalize to mid-single-digit growth for the remainder of the fiscal year [21][22] Other Important Information - The company repurchased $92 million of common stock under its share repurchase program, reflecting a disciplined capital allocation strategy [19] - The adjusted tax rate for the quarter increased to 18.5%, driven by accelerated sales growth [18] Q&A Session Summary Question: How does Chili's plan to leverage tokenized consumer data to enhance engagement? - Management indicated that they are learning to use tokenized data to track guest frequency and understand the impact of menu initiatives on customer retention [23][24] Question: What is the performance of the value platform? - The value platform is performing well, with the $10.99 message driving significant market share for Chili's [25][26] Question: What is the outlook for younger consumers? - Management noted that younger consumers are returning as frequently as other guests, and marketing efforts are focused on maintaining relevance with this demographic [30][31] Question: What is the status of the menu renovation? - The company is progressing with menu renovations, including a chicken sandwich platform and plans to bring back the old skillet queso due to customer demand [34][35] Question: How is the North of Six initiative progressing? - The initiative is ongoing, with improvements in scheduling and equipment being implemented to enhance restaurant performance [59][61] Question: What is the impact of commodity inflation on margins? - Management indicated that commodity inflation may lead to flat to slightly positive margins, with ongoing adjustments to pricing strategies [47][49]

Sales Performance - Brinker's same store sales increased by 13% in Q1 F25 and 18.8% in Q1 F26[6] - Chili's same store sales increased by 14.1% in Q1 F25 and 21.4% in Q1 F26[6] - Maggiano's same store sales increased by 4.2% in Q1 F25 but decreased by 6.4% in Q1 F26[6] - Domestic franchise same store sales increased by 12.3% in Q1 F25 and 23.1% in Q1 F26[6] - International franchise same store sales increased by 3.7% in Q1 F25 and 16.5% in Q1 F26[6] - Chili's company sales were $1.019 billion in Q1 F25 and $1.197 billion in Q1 F26[8] - Maggiano's company sales were $108 million in Q1 F25 and $149 million in Q1 F26[8] - Total company sales were $1.127 billion in Q1 F25 and $1.346 billion in Q1 F26[10] - Total revenues were $1.139 billion in Q1 F25 and $1.358 billion in Q1 F26[11] Cost Management - Food cost increased by 120 bps due to unfavorable menu mix, offset by commodity inflation (40 bps) and menu price (-100 bps)[13] - Labor cost decreased by 150 bps due to sales leverage, offset by hourly labor (60 bps), manager salaries (10 bps), and other (340 bps)[15] - Restaurant expense decreased significantly by 310 bps due to sales leverage[16, 17]