Brinker International (EAT) is expected to report Q4 earnings before market open Tuesday, Aug. 5, with a conference call scheduled for 10:00 am ET.
Analysts are looking for a profit of 42c on revenue of $923.35M. The consensus range is 37c to 48c for EPS, and revenue of $897.3M to $1.03B, according to First Call.
In a June 30 note to clients, Goldman Sachs upgraded shares to Neutral from Sell. The firm said Brinker, with its slower growth, asset divestitures and refranchising opportunity, screens as having among the best sequential improvement in free cash flow in the next couple of years. This is primarily from the significant slowdown in company development. Additionally, the firm believes the announcement of the long-delayed sale of Macaroni Grill will likely be viewed positively as the proceeds from the sale will be used to repurchase shares or pay down debt. However, the firm's views on the bar-and-grill segment of casual dining "have not changed," but sees a more balanced risk/reward profile for Brinker shares at these levels.
Deutsche Bank said in a note to investors that the restaurant industry appears to be at the "beginning of a store rationalization process" marked by restaurant closings and slower growth; the firm warned that this process could take several more quarters, if not many more years, before the cuts turn into profits.
A California appeals court recently ruled that a lawsuit alleging Brinker is responsible for ensuring employees take meal and rest breaks will not proceed in California courts as a class-action suit.