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Here's Why You Should Add Brinker (EAT) to Your Portfolio
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A wise investment decision involves buying well-performing stocks at the right time, while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.
Brinker International, Inc. (EAT - Free Report) is a restaurant stock that has performed extremely well in the last three months and has the potential to carry on the momentum in the near term. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes Brinker an Attractive Pick?
An Outperformer: The company has outperformed its industry in the last three months. The stock returned 22.4% compared with 7.1% increase recorded by the industry. The price surge seems to be the result of strong investor optimism around Chili’s turnaround that includes a new menu, and marketing and operational focus.
In first-quarter fiscal 2018, Brinker implemented its new menu with 40% fewer items than a year ago, supported by an aggressive marketing strategy. A simpler menu, better quality, faster execution and stronger value are expected to aid Chili's turnaround. In fact, the ongoing momentum resulting from the menu launch has been a positive and will help to drive traffic at Chili's in the upcoming quarters.
Investors also seem encouraged about Brinker’s digital initiatives — particularly those around Chilli’s. The company is investing heavily in technology-driven initiatives, like online ordering, to augment sales and boost guest services.
Having installed a tabletop technology at its company-owned restaurants in partnership with Ziosk, the company has implemented handheld devices at its restaurants in California. This is resulting in increased efficiency and speed. Moreover, Brinker effectively uses the social media platform and email database to drive customer awareness and boost traffic. These initiatives are expected to contribute significantly to Brinker’s business going forward.
Meanwhile, the company’s partnership with mobile and online food ordering service, Olo, for its To-Go platform, continues to provide digital services to restaurants and offers Chili's customers with pre-order, group order and pay flexibility. This integration is helping the company garner more members for the loyalty program, and thereby retain customers.
Brinker also stands to gain from integrating its My Chili's Reward program with Plenti — a rewards program by American Express that offers leading brands across multiple categories. It gives Chili’s access to Plenti’s huge database of members and is likely to improve sales and profits.
Moreover, the company launched a digital curbside platform in its company-owned restaurants. Thus, take-out guests can now order, pay, and get their food conveniently, all through the Chili's app. With about half of the company’s online guests using it, the service is ensuring simpler, faster and effortless experience to take-out guests, thereby resulting in higher check. This should improve sales, going forward.
Solid Rank & VGM Score: Brinker carries a Zacks Rank #1 (Strong Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or #2 (Buy), offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
Northward Estimate Revisions: Three estimates for fiscal 2018 moved north in the past 60 days versus no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for fiscal 2018 increased 3.1%. This is encouraging ahead of the earnings season.
It appears that analysts are positive about Brinker’s continued expansion and remodeling initiatives. The company is consistently trying to steer its business in to fast-growing emerging markets and targets to open 38 to 43 restaurants globally in fiscal 2018, which will include new markets like Panama, Chile and Vietnam.
Further, Brinker’s remodeling efforts have gained momentum leading to sales improvement. Notably, the company continues to invest in refreshing the fleet with its reimage program. In fact, during the first quarter of fiscal 2018, the company witnessed higher-than-expected comps. Brinker’s remodeling initiative is thus expected to continue invigorating its potential as a brand and augment guests’ experience.
Brinker is one of the few fast-casual restaurant chains that have been expanding despite a sluggish economic development.
Positive Earnings Surprise History: Brinker’ has a decent earnings surprise history. The company outpaced the Zacks Consensus Estimate in two of the trailing four quarters, delivering a positive average earnings surprise of 1.69%.
Given Chili’s turnaround adding strength, and solid digital and expansion efforts to boost growth, the stock seems to have decent upside potential.
Darden and Domino’s 2018 earnings are expected to improve 15.9% and 29.2%, respectively. Current quarter earnings for Famous Dave's is estimated to grow 70%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Here's Why You Should Add Brinker (EAT) to Your Portfolio
A wise investment decision involves buying well-performing stocks at the right time, while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.
Brinker International, Inc. (EAT - Free Report) is a restaurant stock that has performed extremely well in the last three months and has the potential to carry on the momentum in the near term. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes Brinker an Attractive Pick?
An Outperformer: The company has outperformed its industry in the last three months. The stock returned 22.4% compared with 7.1% increase recorded by the industry. The price surge seems to be the result of strong investor optimism around Chili’s turnaround that includes a new menu, and marketing and operational focus.
In first-quarter fiscal 2018, Brinker implemented its new menu with 40% fewer items than a year ago, supported by an aggressive marketing strategy. A simpler menu, better quality, faster execution and stronger value are expected to aid Chili's turnaround. In fact, the ongoing momentum resulting from the menu launch has been a positive and will help to drive traffic at Chili's in the upcoming quarters.
Investors also seem encouraged about Brinker’s digital initiatives — particularly those around Chilli’s. The company is investing heavily in technology-driven initiatives, like online ordering, to augment sales and boost guest services.
Having installed a tabletop technology at its company-owned restaurants in partnership with Ziosk, the company has implemented handheld devices at its restaurants in California. This is resulting in increased efficiency and speed. Moreover, Brinker effectively uses the social media platform and email database to drive customer awareness and boost traffic. These initiatives are expected to contribute significantly to Brinker’s business going forward.
Meanwhile, the company’s partnership with mobile and online food ordering service, Olo, for its To-Go platform, continues to provide digital services to restaurants and offers Chili's customers with pre-order, group order and pay flexibility. This integration is helping the company garner more members for the loyalty program, and thereby retain customers.
Brinker also stands to gain from integrating its My Chili's Reward program with Plenti — a rewards program by American Express that offers leading brands across multiple categories. It gives Chili’s access to Plenti’s huge database of members and is likely to improve sales and profits.
Moreover, the company launched a digital curbside platform in its company-owned restaurants. Thus, take-out guests can now order, pay, and get their food conveniently, all through the Chili's app. With about half of the company’s online guests using it, the service is ensuring simpler, faster and effortless experience to take-out guests, thereby resulting in higher check. This should improve sales, going forward.
Solid Rank & VGM Score: Brinker carries a Zacks Rank #1 (Strong Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or #2 (Buy), offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
Northward Estimate Revisions: Three estimates for fiscal 2018 moved north in the past 60 days versus no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for fiscal 2018 increased 3.1%. This is encouraging ahead of the earnings season.
It appears that analysts are positive about Brinker’s continued expansion and remodeling initiatives. The company is consistently trying to steer its business in to fast-growing emerging markets and targets to open 38 to 43 restaurants globally in fiscal 2018, which will include new markets like Panama, Chile and Vietnam.
Further, Brinker’s remodeling efforts have gained momentum leading to sales improvement. Notably, the company continues to invest in refreshing the fleet with its reimage program. In fact, during the first quarter of fiscal 2018, the company witnessed higher-than-expected comps. Brinker’s remodeling initiative is thus expected to continue invigorating its potential as a brand and augment guests’ experience.
Brinker is one of the few fast-casual restaurant chains that have been expanding despite a sluggish economic development.
Positive Earnings Surprise History: Brinker’ has a decent earnings surprise history. The company outpaced the Zacks Consensus Estimate in two of the trailing four quarters, delivering a positive average earnings surprise of 1.69%.
Given Chili’s turnaround adding strength, and solid digital and expansion efforts to boost growth, the stock seems to have decent upside potential.
Key Picks
Some other top-ranked stocks in the same space include Darden Restaurants (DRI - Free Report) , Domino’s Pizza (DPZ - Free Report) and Famous Dave's of America (DAVE - Free Report) , all carrying a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Darden and Domino’s 2018 earnings are expected to improve 15.9% and 29.2%, respectively. Current quarter earnings for Famous Dave's is estimated to grow 70%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>