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Brinker International (EAT)
NYSE:EAT
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Brinker International
(NYSE:EAT)73Outperform
Positive Factors
Earnings Guidance
EAT raised its FY25 EPS guidance to a range of $7.50-$8.00, reflecting stronger performance and increased revenue outlook.
Sales Performance
Chili's comp sales showed a highly impressive increase of 31.4%, significantly exceeding expectations and historical averages.
Negative Factors
Valuation Concerns
The stock’s current valuation leaves little room for error and is currently well beyond what was originally thought to be a realistic bull-case scenario.
Brinker International (EAT) vs. S&P 500 (SPY)
Market Cap
$6.77B
Dividend YieldN/A
Average Volume (3M)1.61M
Price to Earnings (P/E)26.1
Beta (1Y)0.87
Revenue Growth13.67%
EPS Growth69.41%
CountryUS
Employees68,852
SectorConsumer Cyclical
Sector Strength53
IndustryRestaurants & Bars
Share Statistics
EPS (TTM)5.76
Shares Outstanding44,406,857
10 Day Avg. Volume1,535,220
30 Day Avg. Volume1,608,612
Financial Highlights & Ratios
PEG Ratio0.38
Price to Book (P/B)N/A
Price to Sales (P/S)1.40
Price to Cash Flow (P/CF)7.80
P/FCF Ratio9.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$170.67Price Target Upside22.37% Upside
Rating ConsensusHold
Number of Analyst Covering14
Brinker International Business Overview & Revenue Model
Company DescriptionBrinker International, Inc. (EAT) is a prominent player in the casual dining restaurant industry, primarily known for its two flagship brands, Chili's Grill & Bar and Maggiano's Little Italy. Headquartered in Dallas, Texas, the company operates in the food and beverage sector, offering a diverse menu that includes American, Tex-Mex, and Italian cuisines. With a focus on providing a high-quality dining experience, Brinker International has established a strong presence both domestically and internationally through its company-owned and franchised restaurant locations.
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 exhibits strong revenue growth and profitability with healthy cash flows, reflective of efficient operations. However, the high debt levels pose a risk, necessitating careful management to sustain financial health. The shift to positive equity signals 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 | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 4.83B | 4.42B | 4.13B | 3.80B | 3.34B | 3.08B | Gross Profit |
| 707.00M | 627.30M | 500.10M | 499.20M | 503.30M | 408.60M | EBIT |
| 388.70M | 229.60M | 144.40M | 159.50M | 199.30M | 103.00M | EBITDA |
| 561.50M | 400.70M | 314.20M | 325.70M | 351.60M | 226.80M | Net Income Common Stockholders |
| 263.00M | 155.30M | 102.60M | 117.60M | 131.60M | 24.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 14.80M | 64.60M | -1.13B | 13.50M | 23.90M | 43.90M | Total Assets |
| 2.56B | 2.59B | 2.49B | 2.48B | 2.27B | 2.36B | Total Debt |
| 1.86B | 2.00B | 2.04B | 2.27B | 1.92B | 2.27B | Net Debt |
| 1.84B | 1.93B | 3.16B | 2.26B | 1.90B | 2.23B | Total Liabilities |
| 2.43B | 2.55B | 2.63B | 2.75B | 2.58B | 2.84B | Stockholders Equity |
| 131.50M | 39.40M | -144.30M | -268.10M | -303.30M | -479.10M |
| Cash Flow | Free Cash Flow | ||||
| 337.40M | 223.00M | 71.40M | 101.90M | 275.70M | 140.50M | Operating Cash Flow |
| 552.60M | 421.90M | 256.30M | 252.20M | 369.70M | 245.00M | Investing Cash Flow |
| -211.20M | -192.20M | -174.20M | -234.20M | -90.90M | -194.00M | Financing Cash Flow |
| -349.30M | -180.20M | -80.50M | -28.40M | -298.80M | -20.50M |
Brinker International Technical Analysis
Negative
139.47
Price Trends
153.97
Negative
133.91
Positive
101.88
Positive
Market Momentum
-2.32
Positive
37.85
Neutral
21.40
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EAT, the sentiment is Negative. The current price of 139.47 is below the 20-day moving average (MA) of 159.25, below the 50-day MA of 153.97, and above the 200-day MA of 101.88, indicating a neutral trend. The MACD of -2.32 indicates Positive momentum. The RSI at 37.85 is Neutral, neither overbought nor oversold. The STOCH value of 21.40 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $12.29B | 28.59 | 34.69% | 1.31% | 16.01% | 42.54% | |
77 Outperform | $22.58B | 22.10 | 50.93% | 2.86% | 5.14% | 5.30% | |
74 Outperform | $2.60B | 15.70 | 41.18% | 2.15% | 4.13% | 56.76% | |
73 Outperform | $6.77B | 26.08 | 2390.91% | ― | 13.67% | 69.41% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
41 Neutral | $84.54M | ― | 92.02% | ― | -4.19% | -266.52% | |
36 Underperform | $699.83M | ― | -13.92% | 11.10% | -7.42% | -153.35% |
* Consumer Cyclical Sector Average
Performance Comparison
EAT
Brinker International
139.47
90.81
186.62%
DRI
Darden Restaurants
192.31
25.06
14.98%
RRGB
Red Robin Gourmet
4.62
-2.50
-35.11%
TXRH
Texas Roadhouse
179.23
31.11
21.00%
CAKE
Cheesecake Factory
48.22
12.44
34.77%
BLMN
Bloomin' Brands
8.56
-19.94
-69.96%
Brinker International Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -9.79% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive outlook with significant achievements in same-store sales growth, operational improvements, and financial performance. Despite challenges in competitive pricing and traffic decline at Maggiano's, the overall sentiment is strong due to successful marketing campaigns and strategic investments in kitchen technology.Highlights
Record-Breaking Same-Store Sales Increase
Chili's reported same-restaurant sales up 31% year-over-year, significantly outperforming the industry.
Operational Improvements and Simplification
Successful operational changes including a 40% reduction in cook times for steak and the removal of complex stations such as the It's Just Wings station have streamlined operations and improved efficiency.
Introduction and Success of Marketing Campaigns
The Triple Dipper social media campaign and the Better Than Fast Food TV campaign have successfully driven traffic and guest counts, with Triple Dipper now representing 14% of total sales.
Strong Financial Performance
Brinker reported total revenues of $1.358 billion with consolidated comp sales of positive 27.4%. Adjusted diluted EPS was $2.80, up from $0.99 last year.
Margin Expansion
Restaurant operating margin came in at 19.1%, a 600 basis points improvement year-over-year.
Debt Reduction
The company repaid approximately $164 million in debt, significantly reducing financial leverage to 2.3 times.
Kitchen Technology Upgrades
Decision to accelerate investments in TurboChefs to improve cooking speed and quality, making kitchens more efficient and comfortable for staff.
Lowlights
Maggiano's Traffic Decline
Maggiano's reported comp sales growth of 1.8%, with a decline in traffic by 4.9%.
Challenging Competitor Pricing
Increased competitive promotional activity attempted to undercut Chili's pricing, testing the strength of Chili's value proposition.
Company Guidance
During Brinker International's Q2 fiscal 2025 earnings call, management provided robust guidance, highlighting their expectations for continued strong performance. The company raised its full-year revenue projection to a range of $5.15 billion to $5.25 billion, supported by impressive same-store sales growth of 27.4% in the second quarter, with Chili’s alone achieving a 31.4% increase. Adjusted diluted EPS for the full year is anticipated to be between $7.50 and $8.00. Key operational improvements, such as the introduction of TurboChef ovens and a focus on menu simplification, have contributed to a 600 basis point expansion in restaurant operating margin, now at 19.1%. Despite a temporary dip in labor alignment at the beginning of Q2, the company exited the quarter with labor levels where they wanted them, supporting sustained growth. The guidance also includes capital expenditures projected between $240 million and $260 million, with plans to further invest in operational efficiency and brand relevance.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.