Update: Brinker Earnings

| About: Brinker International, (EAT)


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.

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