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Brinker International (EAT) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this operator of restaurant chains Chili's Grill & Bar and Maggiano's Little Italy, should get reflected in its stock price. Afte ...

Core Insights - Brinker International's stock has increased over 300% in the past year, reaching new 52-week highs of $184 per share after strong fiscal Q2 earnings [1][3]. Financial Performance - Brinker reported Q2 sales of $1.35 billion, a 26% increase from $1.07 billion in the same quarter last year, surpassing sales estimates of $1.24 billion [3]. - Same-restaurant sales at Chili's rose by 31% year-over-year, significantly outperforming the industry [4]. - The company's Q2 earnings per share (EPS) reached $2.80, up from $0.99 in the prior year, exceeding expectations of $1.80 by 55% [4][5]. Future Guidance - Following the positive Q2 results, Brinker expects fiscal 2025 earnings to be between $7.50 and $8.00 per share, which is 52% higher than the current Zacks Consensus estimate of $6.23 [6]. - The company anticipates a further 14% growth in its bottom line for the next year [6]. Earnings Estimate Revisions - There has been a compelling trend of positive earnings estimate revisions for Brinker, with a 58% increase in FY25 EPS projections since January of the previous year [7]. Investment Outlook - Following the strong Q2 report, Brinker International holds a Zacks Rank 1 (Strong Buy), indicating potential for further upside as earnings estimates continue to rise [8].

Restaurant Operations - As of December 25, 2024, the company owned, operated, or franchised a total of 1,624 restaurants, including 1,164 company-owned and 460 franchised locations[68]. - The company opened 21 new franchise restaurants during the twenty-six week period ended December 25, 2024, with plans for further international expansion[75]. Financial Performance - Total revenues for the thirteen-week period ended December 25, 2024, were $1,358.2 million, an increase from $1,074.1 million for the same period in 2023, representing a growth of approximately 26.5%[78]. - Chili's total revenues increased by 30.4% to $1,208.8 million for the thirteen-week period ended December 25, 2024, compared to $927.2 million for the same period in 2023[94]. - Chili's total revenues increased by 22.0% to $2,239.2 million for the twenty-six week period ended December 25, 2024, compared to $1,835.3 million for the same period in 2023[99]. - Maggiano's total revenues increased by 2.7% to $258.0 million for the twenty-six week period ended December 25, 2024, compared to $251.3 million for the same period in 2023[106]. Comparable Sales - Comparable restaurant sales for company-owned locations increased by 27.4% in the thirteen-week period ended December 25, 2024, driven by a 16.5% increase in traffic[80]. - The company reported a 20.4% increase in comparable restaurant sales for the twenty-six week period ended December 25, 2024, compared to the same period in 2023[80]. - Comparable restaurant sales for Chili's were driven by higher traffic, favorable menu item mix, and menu pricing, contributing to a significant increase in overall sales[94]. Cost Management - Food and beverage costs as a percentage of company sales decreased from 26.1% to 25.9%, with a favorable variance of 0.2% attributed to menu pricing[95]. - Restaurant labor costs improved by 2.5%, decreasing from 34.1% to 31.6% of company sales, due to sales leverage and lower other labor expenses[95]. - Chili's food and beverage costs were favorable by 0.3%, primarily due to 1.5% from menu pricing, partially offset by 0.7% of unfavorable commodity costs[101]. - Chili's restaurant labor costs were favorable by 1.9%, attributed to 4.2% of sales leverage and lower other labor expenses, despite higher hourly labor costs[101]. - Maggiano's food and beverage costs were favorable by 0.8%, driven by 1.4% from menu pricing, partially offset by unfavorable commodity costs[108]. - Maggiano's restaurant labor costs were favorable by 1.6%, due to lower hourly labor and sales leverage, despite higher manager salaries[108]. Expenses - General and administrative expenses rose by $19.3 million to $104.9 million, primarily due to performance-based and stock-based compensation increases[90]. - Chili's general and administrative expenses increased by $3.8 million to $24.0 million for the twenty-six week period ended December 25, 2024, compared to $20.2 million for the same period in 2023[102]. - Depreciation and amortization expenses increased by $10.8 million to $94.0 million, driven by additions for new and existing restaurant assets[88]. - Chili's depreciation and amortization increased by $10.6 million to $82.3 million for the twenty-six week period ended December 25, 2024, compared to $71.7 million for the same period in 2023[101]. Cash Flow and Financing - Net cash provided by operating activities increased to $281.0 million for the twenty-six week period ended December 25, 2024, compared to $150.3 million for the same period in 2023[109]. - Net cash used in investing activities increased to $(105.8) million for the twenty-six week period ended December 25, 2024, compared to $(86.8) million in the prior year, reflecting a variance of $(19.0) million[110]. - Net cash used in financing activities rose to $(225.0) million, an increase of $(169.1) million primarily due to higher net repayments of long-term debt and share repurchase activity[111]. - The company refinanced $350.0 million of 5.000% notes through its revolving credit facility, with net borrowings of $215.0 million drawn during the twenty-six week period ended December 25, 2024[112]. - As of December 25, 2024, the company had $685.0 million available under its revolving credit facility, which matures on August 18, 2026[113]. - The company repurchased 1.2 million shares for $85.2 million during the twenty-six week period ended December 25, 2024, with approximately $107.0 million remaining under the current share repurchase authorization[117]. - The company expects its current cash and cash equivalents, along with cash generated from operations and availability under the revolving credit facility, to meet capital expenditure and working capital needs for at least the next twelve months[118]. Risks and Challenges - A hypothetical 100 basis point increase in the current interest rate on the outstanding balance of the revolving credit facility would result in an additional $2.2 million of annual interest expense[121]. - The company is exposed to commodity price risk, which could negatively affect short-term financial results if there are delays in passing on increased costs to customers[122]. Technology and Marketing - The company has invested in technology to enhance the dining experience, including mobile app ordering and tabletop payment devices[72]. - The company has simplified its menu to focus on core items, which has contributed to improved sales consistency and guest satisfaction[71]. - The company plans to continue highlighting value offerings in marketing efforts to drive guest traffic amid inflationary challenges[71].

Core Insights - Brinker International, Inc. (EAT) reported strong second-quarter fiscal 2025 results, with earnings and revenues exceeding expectations, showing growth from the previous year [1][4] - The company raised its fiscal 2025 guidance following positive quarterly performance, reflecting strong fundamentals and increased guest traffic at Chili's [3][13] Financial Performance - Adjusted earnings per share (EPS) for the quarter were $2.80, surpassing the Zacks Consensus Estimate of $1.80, and up from $0.99 in the prior-year quarter [4] - Total revenues reached $1.36 billion, exceeding the consensus mark of $1.24 billion, and increased by 26.5% year-over-year [4] - Adjusted EBITDA for the quarter was $215.8 million, up from $107 million reported in the prior-year quarter [11] Segment Performance - Chili's segment revenues rose 30.4% year-over-year to $1.21 billion, driven by favorable comparable restaurant sales, menu pricing, and increased traffic [5] - Comparable restaurant sales at Chili's increased by 31.4% year-over-year, with domestic comps gaining 30.8% compared to a 5.1% rise in the prior-year period [7] - Maggiano's sales increased by 1.7% year-over-year to $149.4 million, although traffic fell by 4.9% [8] Cost and Margin Analysis - Chili's restaurant expenses as a percentage of company sales decreased to 81.3% from 88.4% in the prior-year quarter, aided by sales leverage despite rising labor and commodity costs [6] - Adjusted restaurant operating margin improved to 19.1%, up from 13.1% in the prior-year quarter [11] Balance Sheet and Guidance - As of December 25, 2024, cash and cash equivalents were $14.8 million, down from $22.7 million a year earlier, while long-term debt decreased to $625 million from $786.3 million [12] - For fiscal 2025, management anticipates total revenues between $5.15 billion and $5.25 billion, up from previous expectations of $4.70 billion to $4.75 billion, and EPS in the range of $7.5 to $8 [13]

Core Insights - Brinker International's shares reached an all-time high after exceeding profit and sales estimates, driven by strong performance at Chili's locations [1][5] - The company reported second-quarter fiscal 2025 adjusted EPS of $2.80 and revenue of $1.35 billion, significantly surpassing analyst expectations of $1.78 EPS and $1.24 billion in revenue [1][5] Financial Performance - Comparable restaurant sales increased by 27% overall, with Chili's experiencing a 31% rise, attributed to a 20% increase in traffic due to effective advertising and operational improvements [2][5] - Maggiano's Little Italy saw a modest increase in comparable restaurant sales of 1.8% [2] Future Outlook - The company raised its full-year adjusted EPS guidance to between $7.50 and $8.00, and revenue expectations to $5.15 billion to $5.25 billion, up from previous estimates of $5.20 to $5.50 EPS and $4.70 billion to $4.75 billion in revenue [3]

Group 1 - Brinker International, Inc. (EAT) has a Zacks Rank 1 with a 13.4% increase in the current year earnings estimate over the last 60 days [1] - Brinker International's shares increased by 48.3% in the last three months, outperforming the S&P 500's 4.2% gain [1] - LifeStance Health Group, Inc. (LFST) also holds a Zacks Rank 1, with an 18.2% rise in the current year earnings estimate over the last 60 days [2] - LifeStance Health Group's shares rose by 19.9% in the last three months, again surpassing the S&P 500's 4.2% increase [2] - Moelis & Company (MC) has a Zacks Rank 1, with an 8.3% increase in the current year earnings estimate over the last 60 days [3] - Moelis & Company's shares gained 17.3% over the last three months, compared to the S&P 500's 4.2% advance [3] - All three companies possess a Momentum Score of A, indicating strong momentum characteristics [1][2][3]

Financial Performance - For the quarter ended December 2024, Brinker International reported revenue of $1.36 billion, reflecting a year-over-year increase of 26.5% [1] - Earnings per share (EPS) for the quarter was $2.80, significantly up from $0.99 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $1.24 billion by 9.32%, while the EPS surpassed the consensus estimate of $1.80 by 55.56% [1] Key Metrics - Comparable store sales for Chili's increased by 31.4%, outperforming the nine-analyst average estimate of 19.1% [4] - Total company-owned restaurants stood at 1,164, slightly below the eight-analyst average estimate of 1,170 [4] - Franchise restaurants totaled 460, in line with the average estimate of 457 [4] Revenue Breakdown - Total revenue from company restaurant sales was $1.35 billion, exceeding the nine-analyst average estimate of $1.23 billion, marking a year-over-year change of 26.6% [4] - Revenue from Chili's company sales reached $1.20 billion, surpassing the four-analyst average estimate of $1.06 billion, with a year-over-year increase of 30.5% [4] - Revenue from Maggiano's company sales was $149.20 million, slightly below the estimated $150.41 million, but still reflecting a 1.6% year-over-year increase [4] Franchise Revenue - Franchise revenues for Chili's amounted to $11.90 million, exceeding the average estimate of $11.47 million, representing a year-over-year change of 15.5% [4] - Total revenue for Chili's was reported at $1.21 billion, compared to the average estimate of $1.05 billion, indicating a year-over-year increase of 30.4% [4] - Franchise revenues for Maggiano's reached $0.20 million, surpassing the average estimate of $0.15 million, showing a remarkable year-over-year change of 100% [4] Stock Performance - Shares of Brinker International have returned 16.9% over the past month, significantly outperforming the Zacks S&P 500 composite's 1.7% change [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), suggesting potential for outperformance in the near term [3]

Core Viewpoint - Brinker International reported strong quarterly earnings, significantly exceeding expectations, indicating robust performance in the restaurant sector [1][2][3]. Financial Performance - The company achieved earnings of $2.80 per share, surpassing the Zacks Consensus Estimate of $1.80 per share, and showing a substantial increase from $0.99 per share a year ago [1]. - Revenues for the quarter reached $1.36 billion, exceeding the Zacks Consensus Estimate by 9.32%, and up from $1.07 billion in the same quarter last year [3]. - The earnings surprise for the quarter was 55.56%, and the company has outperformed consensus EPS estimates three out of the last four quarters [2]. Stock Performance - Brinker International shares have increased approximately 16.9% since the beginning of the year, compared to a 3.2% gain in the S&P 500 [4]. - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating expectations for continued outperformance in the near future [7]. Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.71, with projected revenues of $1.24 billion, and for the current fiscal year, the EPS estimate is $6.23 on revenues of $4.87 billion [8]. - The industry outlook is favorable, with the Retail - Restaurants sector ranking in the top 20% of over 250 Zacks industries, suggesting potential for strong performance [9].

Financial Performance - Company sales for Q2 fiscal 2025 reached $1,346.1 million, a 26.5% increase from $1,063.7 million in Q2 fiscal 2024[3] - Operating income for Q2 fiscal 2025 was $156.0 million, representing an increase of 150.8% from $62.4 million in Q2 fiscal 2024[3] - Net income for Q2 fiscal 2025 was $118.5 million, compared to $42.1 million in Q2 fiscal 2024, marking a 181.5% increase[3] - Adjusted EBITDA for Q2 fiscal 2025 was $215.8 million, up 101.7% from $107.0 million in Q2 fiscal 2024[3] - Total revenues for the thirteen weeks ended December 25, 2024, increased to $1,358.2 million, up from $1,074.1 million for the same period in 2023, representing a growth of 26.5%[19] - Net income for the twenty-six weeks ended December 25, 2024, was $157.0 million, compared to $49.3 million for the same period in 2023, reflecting a significant increase of 218.5%[19] - Basic net income per share for the thirteen weeks ended December 25, 2024, was $2.67, compared to $0.95 for the same period in 2023, marking an increase of 180%[19] - Adjusted EBITDA for Q2 25 was $215.8 million, compared to $107.0 million in Q2 24, reflecting a 101% year-over-year increase[37] - Net income for Q2 25 was $118.5 million, a substantial rise from $42.1 million in Q2 24, marking a 181% increase[37] Sales and Revenue Growth - Comparable restaurant sales increased by 27.4%, with Chili's up 31.4% and Maggiano's up 1.8%[4] - Comparable restaurant sales for company-owned restaurants increased by 27.4% for Q2 2025 compared to Q2 2024, driven by a price impact of 5.0% and a traffic increase of 16.5%[29] - Chili's franchisees generated sales of approximately $232.3 million in Q2 fiscal 2025, compared to $216.9 million in Q2 fiscal 2024[13] - Franchise revenues for Q2 25 were $11.9 million, slightly up from $10.3 million in Q2 24, showing growth in franchise operations[34] Future Projections - The company expects total revenues for fiscal 2025 to be in the range of $5.15 billion to $5.25 billion[8] - Net income per diluted share, excluding special items, is projected to be between $7.50 and $8.00 for fiscal 2025[8] - The company plans to open 31 to 37 new restaurants in fiscal year 2025, with 22 openings projected for the second quarter[28] Operating Costs and Expenses - Total operating costs and expenses for the twenty-six weeks ended December 25, 2024, were $2,284.8 million, up from $2,000.0 million in the same period in 2023, an increase of 14.2%[19] - Interest expenses decreased to $29.0 million for the twenty-six weeks ended December 25, 2024, from $33.7 million in the same period in 2023, a reduction of 13.9%[19] - Interest expenses decreased to $14.7 million in Q2 25 from $16.7 million in Q2 24, reflecting improved financial management[37] Capital Expenditures and Cash Flow - Capital expenditures for fiscal 2025 are expected to be in the range of $240.0 million to $260.0 million[8] - Cash flows from operating activities for the twenty-six weeks ended December 25, 2024, were $281.0 million, compared to $150.3 million for the same period in 2023, indicating a growth of 87.2%[25] Operational Efficiency - Q2 25 GAAP operating income for Chili's was $175.1 million, up from $70.1 million in Q2 24, representing a 150% increase[34] - Restaurant operating margin for Chili's in Q2 25 was 18.7%, compared to 11.6% in Q2 24, indicating a significant improvement in operational efficiency[34] - The company plans to continue focusing on restaurant-level operational efficiency to enhance profitability in future quarters[35] Asset Management - The total assets of the company as of December 25, 2024, were $2,560.3 million, slightly down from $2,593.1 million as of June 26, 2024[22] - Depreciation and amortization expenses for Q2 25 were $47.7 million, compared to $41.3 million in Q2 24, indicating increased investment in assets[37]