Update: Brinker Earnings

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 |  About: Brinker International, Inc. (EAT)
by: Activist Stocks

Summary

The company missed on the bottom line but beat on the top line.

We are still bullish for the company’s long-term growth prospects.

The recent quarterly miss was not expected, but only a minor hiccup as the company appears to be executing its long-term growth plan nicely.

Brinker (NYSE:EAT) posted fiscal 4Q earnings that had missed by 2%. EPS came in at $0.85 (versus expectations of $0.86). But revenues for the quarter were $758 million (beating consensus of $749 million). Shares did jump 5% on the news. This comes as y/y EPS was up 10% and comparable restaurant sales were up 16%.

Shares are up just 7% since we first covered the stock back in August of last year. That's fairly disappointing, compared to the overall market, but against a weak restaurant industry, investors could have done a lot worse. Over the same period, the S&P 500 is up 14%, but the Dow Jones Restaurant & Bar Index is only up 2%. We still have a multi-year price target of $80 on the company. It doesn't hurt that the company still pays a 2% dividend yield.

In fiscal 4Q, its Chili's company-owned comparable restaurant sales were up 2.5%, and franchised comparable sales were up 1.2% (U.S. franchised stores were up 1.4% and international up 0.8%). Maggiano's comparable restaurant sales were up 0.9%. As we noted back in August, the keys going forward for Brinker will be expanding Chili's internationally (beyond just the Middle East and Mexico) and opening more prototype (smaller) Maggiano's stores.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.