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Brinker International (EAT)
NYSE:EAT
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Brinker International
(NYSE:EAT)
68Neutral
Positive Factors
Earnings Guidance
EAT raised its FY25 EPS guidance to a range of $7.50-$8.00, reflecting stronger performance and an increased revenue outlook.
Margin Expansion
Restaurant margins expanded significantly, with leverage across operating expenses, labor, and cost of goods sold, exceeding consensus expectations.
Sales Performance
Chili's impressive comp sales increase of 31.4% significantly exceeded expectations and historical averages, driven by effective marketing and operational improvements.
Negative Factors
Investment Persuasiveness
While the turnaround has driven share gains and margin expansion, the strength of the recovery is now reflected in the share price, making investment less persuasive at current levels.
Investor Expectations
The magnitude of 'beat' and guidance revision likely fell below investor expectations, and outlook implies a slowdown in Chili's comp sales to low-20%.
Valuation Concerns
Despite confidence in the durability of EAT's turnaround, there is concern that eventual comp deceleration will compress the stock's valuation multiple.
Brinker International (EAT) vs. S&P 500 (SPY)
Market Cap
$5.96B
Dividend YieldN/A
Average Volume (3M)1.85M
Price to Earnings (P/E)18.5
Beta (1Y)0.77
Revenue Growth19.80%
EPS Growth117.96%
CountryUS
Employees68,852
SectorConsumer Cyclical
Sector Strength57
IndustryRestaurants
Share Statistics
EPS (TTM)2.66
Shares Outstanding44,451,153
10 Day Avg. Volume2,515,853
30 Day Avg. Volume1,849,710
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.49
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit14.11
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$167.56Price Target Upside25.07% Upside
Rating ConsensusHold
Number of Analyst Covering9
Brinker International Business Overview & Revenue Model
Company DescriptionBrinker International, Inc., together with its subsidiaries, engages in the ownership, development, operation, and franchising of casual dining restaurants in the United States and internationally. The company operates in two segments, Chili's and Maggiano's. As of June 30, 2021, it owned, operated, or franchised 1,648 restaurants comprising 1,594 restaurants under the Chili's Grill & Bar name and 54 restaurants under the Maggiano's Little Italy brand name. The company was founded in 1975 and is headquartered in Dallas, Texas.
How the Company Makes MoneyBrinker International generates revenue primarily through the operation of its restaurant brands, Chili's Grill & Bar and Maggiano's Little Italy. The company makes money from the sale of food and beverages at its company-owned restaurants, which account for the majority of its revenue. Additionally, Brinker earns income from franchise fees and royalties from franchised restaurant locations. This includes initial franchise fees and ongoing royalties based on a percentage of the franchisees' sales. The company also benefits from strategic partnerships and marketing initiatives, which help drive customer traffic and sales. Factors such as menu innovation, promotional activities, and cost management contribute significantly to Brinker's earnings, ensuring sustained revenue growth and profitability.
Brinker International Financial Statement Overview
Summary
Brinker International shows strong revenue growth and profitability with healthy cash flows, supported by efficient operations. However, the high debt levels are a significant risk, necessitating careful management to sustain financial health. The positive shift in equity indicates improved balance sheet strength, though further progress is needed.Income Statement
Brinker International demonstrates solid revenue growth with a notable increase of 26.4% in total revenue from 2020 to TTM 2024. The gross profit margin in TTM 2024 is robust at 36.6%, supported by a steady net profit margin of 5.4%. EBIT and EBITDA margins stand at 8.1% and 11.6% respectively, indicating efficient operations. However, the annual growth rate in revenue showed fluctuations, requiring attention to sustainability.75
Positive
Balance Sheet
The company's debt-to-equity ratio in TTM 2024 is high at 14.1, reflecting considerable leverage, which poses a potential risk. Nevertheless, the equity ratio improved to 5.1% from negative values in previous years, signifying a gradual strengthening of the balance sheet. The return on equity (ROE) is strong at 200%, but largely due to the small equity base.60
Neutral
Cash Flow
Operating cash flow to net income ratio is favorable at 2.1 in TTM 2024, indicating robust cash generation capabilities. Free cash flow rose significantly with a growth rate of 51.3% from the previous period, enhancing financial flexibility. Yet, high capital expenditures might impact future cash flow stability.70
Positive
| Breakdown | ||||
| Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.42B | 4.13B | 3.80B | 3.34B | 3.08B | Gross Profit |
| 627.30M | 500.10M | 499.20M | 503.30M | 408.60M | EBIT |
| 229.60M | 144.40M | 159.50M | 199.30M | 103.00M | EBITDA |
| 400.70M | 314.20M | 325.70M | 351.60M | 226.80M | Net Income Common Stockholders |
| 155.30M | 102.60M | 117.60M | 131.60M | 24.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 64.60M | 15.10M | 13.50M | 23.90M | 43.90M | Total Assets |
| 2.59B | 2.49B | 2.48B | 2.27B | 2.36B | Total Debt |
| 2.00B | 2.16B | 2.27B | 2.04B | 2.40B | Net Debt |
| 1.93B | 2.15B | 2.26B | 2.02B | 2.36B | Total Liabilities |
| 2.55B | 2.63B | 2.75B | 2.58B | 2.84B | Stockholders Equity |
| 39.40M | -144.30M | -268.10M | -303.30M | -479.10M |
| Cash Flow | Free Cash Flow | |||
| 223.00M | 71.40M | 101.90M | 275.70M | 140.50M | Operating Cash Flow |
| 421.90M | 256.30M | 252.20M | 369.70M | 245.00M | Investing Cash Flow |
| -192.20M | -174.20M | -234.20M | -90.90M | -194.00M | Financing Cash Flow |
| -180.20M | -80.50M | -28.40M | -298.80M | -20.50M |
Brinker International Technical Analysis
Neutral
133.97
Price Trends
146.58
Negative
148.28
Negative
117.94
Positive
Market Momentum
-3.83
Positive
41.75
Neutral
12.40
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EAT, the sentiment is Neutral. The current price of 133.97 is below the 20-day moving average (MA) of 145.39, below the 50-day MA of 146.58, and above the 200-day MA of 117.94, indicating a neutral trend. The MACD of -3.83 indicates Positive momentum. The RSI at 41.75 is Neutral, neither overbought nor oversold. The STOCH value of 12.40 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for EAT.
Brinker International Risk Analysis
Brinker International disclosed 31 risk factors in its most recent earnings report. Brinker International reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Brinker International Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $11.41B | 26.55 | 34.69% | 1.46% | 16.01% | 42.54% | |
73 Outperform | $2.45B | 15.82 | 46.60% | 2.14% | 4.42% | 48.23% | |
70 Neutral | $1.66B | 11.05 | 29.07% | 3.08% | 3.19% | -17.95% | |
68 Neutral | $4.21B | 343.47 | 2.70% | ― | 14.07% | -47.47% | |
68 Neutral | $5.96B | 18.48 | 314.08% | ― | 19.80% | 117.96% | |
61 Neutral | $6.58B | 11.77 | 3.05% | 3.99% | 2.61% | -21.52% | |
60 Neutral | $1.11B | 13.96 | -20.16% | 5.19% | -3.57% | 2.31% |
* Consumer Cyclical Sector Average
Performance Comparison
EAT
Brinker International
133.97
76.09
131.46%
ARCO
Arcos Dorados Holdings
7.90
-2.95
-27.19%
PZZA
Papa John's International
33.82
-21.03
-38.34%
TXRH
Texas Roadhouse
171.25
8.10
4.96%
CAKE
Cheesecake Factory
49.50
16.39
49.50%
SHAK
Shake Shack
98.68
-4.08
-3.97%
Brinker International Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q3-2025)
| % Change Since: -16.62%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Positive
Brinker International's earnings call highlighted strong sales growth and operational improvements, particularly for Chili's, which significantly outperformed industry averages. Despite challenges in Maggiano's traffic and increased competitive pressures, the overall sentiment remains positive due to effective marketing strategies and financial performance.Q3-2025 Updates
Positive Updates
Strong Same-Restaurant Sales Growth
Chili's delivered a strong quarter with same-restaurant sales up 31.6% and traffic up 21%.
Impressive Restaurant Operating Margin
Chili's achieved an 18.9% restaurant operating margin for the quarter, driven by sales leverage and simplification.
Successful Marketing Initiatives
The Big QP launch and associated marketing efforts generated more impressions than the Big Smasher launch, boosting brand awareness.
Operational Improvements
Implemented significant operational improvements, including menu simplification and enhanced kitchen display systems.
Record-Setting Margarita Sales
The marketing team's enhanced Margarita strategy led to record-breaking Margarita of the Month sales.
Positive Financial Performance
Brinker reported total revenues of $1.425 billion with consolidated comp sales of positive 28.2%. Adjusted diluted EPS for the quarter was $2.66, up from $1.24 last year.
Debt Reduction
Repayment of approximately $125 million in funded debt, reducing overall lease adjusted leverage ratio to 1.9 times.
Negative Updates
Maggiano's Traffic Decline
Maggiano's reported comp sales for the quarter of positive 0.4%, with a negative 8.2% traffic impact, despite price and mix improvements.
Increased Competitive Promotional Environment
The competitive landscape became more intense, with increased promotional activity from competitors.
Higher Labor Costs
Labor for the quarter was favorable 140 basis points year-over-year, but wage rate inflation of approximately 4.5% was noted.
Company Guidance
During the third quarter of fiscal year 2025, Brinker International reported strong financial metrics, with Chili's same-restaurant sales increasing by 31.6% and traffic up by 21%. The company achieved a restaurant operating margin of 18.9% through sales leverage and operational simplification. Total revenues reached $1.425 billion, reflecting a consolidated comp sales increase of 28.2%. Adjusted diluted EPS rose to $2.66 from $1.24 the previous year. Notably, Chili's continued to outperform industry trends without introducing new food or value promotions, maintaining momentum from its Big Smasher campaign. The company's strategy focused on enhancing food, service, and atmosphere, alongside marketing efforts that included the launch of the Big QP burger and the opening of a themed restaurant in Scranton. For the full fiscal year, Brinker raised its guidance, projecting annual revenues between $5.33 billion and $5.35 billion and adjusted diluted EPS between $8.50 and $8.75. Despite macroeconomic challenges, Brinker remains optimistic about sustaining sales growth by focusing on enhancing customer experience and strategic marketing initiatives.Brinker International Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Brinker International Appoints Timothy Johnson to Board
Positive
Feb 18, 2025
On February 12, 2025, Brinker International appointed Timothy Johnson to its Board of Directors, bringing over 30 years of strategic and financial expertise from global retail brands to enhance Brinker’s industry leadership. Additionally, on February 18, 2025, Brinker announced a revised compensatory arrangement for Executive Vice President and CFO Mike Ware, aligning her rewards with peer benchmarks and recognizing her strong performance with a $585,000 annual salary and significant equity-based awards.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.