Brinker International: Stock Is Fair Valued After The Huge Rally

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Vader Capital
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Summary

  • Brinker International had a strong 2Q23 with an SSS of 9.7% and a store margin of 11.6% due to the management of labor costs and implementation of a sales mix.
  • The key to earnings growth for EAT is convergence of margins to those of competitors, but it may not be as quick as it seems.
  • Management has increased FY23 guidance, with an expected revenue of $4.05 to $4.15B and adjusted EPS of $2.60 to $2.90, and plans to increase capital spending in the near future.

Brinker International Sells Corner Bakery

Tim Boyle

Recommendation

I believe Brinker International (NYSE:EAT) is fair valued at the current price, especially after a huge rally over the past 6 months.

With an SSS of 9.7% and a store margin of 11.6%, EAT had a fantastic 2Q23. These were

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Author's own calculation

This article was written by

Vader Capital profile picture
128 Followers
Ex-long only investor turned business owner. Operate in the real estate and chemicals industry. Read and invest in companies on the side every night. I view investment as a never-ending-journey that allows me to constantly learn new industries and business models. While I am not the best today, I strive to be better with each deep-dive and analysis. Finally, this is a very profitable venture that pays well at the end of the journey if the process is done right.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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