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Brinker International (EAT) Shares Lose 0.8% Ahead of Earnings: What to Expect
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Shares of Brinker International (EAT - Free Report) lost 0.8% during regular hours Monday, the last full day of trading before the restaurant franchising company behind the Chili’s and Maggiano’s brands reports its latest quarterly earnings.
Brinker shares have gained 23.5% in the last year, compared to a 4.5% industry average gain. The company continues to implement aggressive expansion strategies and sales-building initiatives to boost comps figures. Unlike most other fast-casual restaurant chains, Brinker has continued to build its presence in both the US and abroad.
Brinker’s To-Go platform is its fastest growing segment, increasing to 11% of total sales in the third quarter. The surge was driven by a double-digit increase in online orders, a promising and much-needed new source of customer traffic. Still, Brinker continues to bear the burden of increased labor costs, and could face pressure internationally as some of its overseas markets undergo an economic slowdown.
Monday’s movement reflects mixed investor sentiment heading into Tuesday’s report. But what should we expect from its soon-to-be-reported quarter? Let’s take a closer look.
Earnings Outlook
Brinker will release its Q4 fiscal 2018 results before the market opens on Tuesday. Here’s what analysts are expecting, according to our Zacks Consensus Estimates:
Earnings:EAT is projected to report earnings of $1.19 per share, which would represent 9.2% growth from the year-ago period.
Estimate Revisions: The firm has seen mixed earnings estimate revision activity. In the last month, EAT has seen a negative revision for the current quarter, while just last week a positive revision was issued for next quarter. Moreover, one upward and two downward earnings estimate revisions have been made for the current fiscal year, with the positive change also coming in the last week.
Revenue:Consensus estimates have EAT’s Q4 revenue pegged at $815.92 million. This would mark growth of 0.7% year-over-year.
Valuation
EAT is trading at 11.7x forward 12-month earnings heading into today’s report. This represents a significant discount compared to the “Retail-Food & Restaurant” industry’s average of about 21x, and is relatively “cheaper” than the stock has traded at in recent years.
In the past year, EAT has traded as high as 14x and as low as 9.1x. Its 52-week median earnings multiple is 10.8x.
Bottom Line
Tuesday’s report will be an important update on Brink’s various growth initiatives. The firm has missed revenue expectations in 10 of the trailing 13 quarters due to traffic decline, so investors should watch for information on either progress or lack thereof.
EAT shares have performed particularly well in the past year, so many investors may be more inclined to realize their gains rather than risk an earnings play. Analyst revision activity for the quarter has been relatively muted, but EAT has a Zacks Earnings ESP (Expected Surprise Prediction) of 1.85%.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Given the stock’s current Zacks Rank of #3 (Hold), this Earnings ESP value leaves us optimistic about EAT’s chances of beating earnings going into Tuesday morning’s report.
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Brinker International (EAT) Shares Lose 0.8% Ahead of Earnings: What to Expect
Shares of Brinker International (EAT - Free Report) lost 0.8% during regular hours Monday, the last full day of trading before the restaurant franchising company behind the Chili’s and Maggiano’s brands reports its latest quarterly earnings.
Brinker shares have gained 23.5% in the last year, compared to a 4.5% industry average gain. The company continues to implement aggressive expansion strategies and sales-building initiatives to boost comps figures. Unlike most other fast-casual restaurant chains, Brinker has continued to build its presence in both the US and abroad.
Brinker’s To-Go platform is its fastest growing segment, increasing to 11% of total sales in the third quarter. The surge was driven by a double-digit increase in online orders, a promising and much-needed new source of customer traffic. Still, Brinker continues to bear the burden of increased labor costs, and could face pressure internationally as some of its overseas markets undergo an economic slowdown.
Monday’s movement reflects mixed investor sentiment heading into Tuesday’s report. But what should we expect from its soon-to-be-reported quarter? Let’s take a closer look.
Earnings Outlook
Brinker will release its Q4 fiscal 2018 results before the market opens on Tuesday. Here’s what analysts are expecting, according to our Zacks Consensus Estimates:
Earnings: EAT is projected to report earnings of $1.19 per share, which would represent 9.2% growth from the year-ago period.
Estimate Revisions: The firm has seen mixed earnings estimate revision activity. In the last month, EAT has seen a negative revision for the current quarter, while just last week a positive revision was issued for next quarter. Moreover, one upward and two downward earnings estimate revisions have been made for the current fiscal year, with the positive change also coming in the last week.
Revenue: Consensus estimates have EAT’s Q4 revenue pegged at $815.92 million. This would mark growth of 0.7% year-over-year.
Valuation
EAT is trading at 11.7x forward 12-month earnings heading into today’s report. This represents a significant discount compared to the “Retail-Food & Restaurant” industry’s average of about 21x, and is relatively “cheaper” than the stock has traded at in recent years.
In the past year, EAT has traded as high as 14x and as low as 9.1x. Its 52-week median earnings multiple is 10.8x.
Bottom Line
Tuesday’s report will be an important update on Brink’s various growth initiatives. The firm has missed revenue expectations in 10 of the trailing 13 quarters due to traffic decline, so investors should watch for information on either progress or lack thereof.
EAT shares have performed particularly well in the past year, so many investors may be more inclined to realize their gains rather than risk an earnings play. Analyst revision activity for the quarter has been relatively muted, but EAT has a Zacks Earnings ESP (Expected Surprise Prediction) of 1.85%.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Given the stock’s current Zacks Rank of #3 (Hold), this Earnings ESP value leaves us optimistic about EAT’s chances of beating earnings going into Tuesday morning’s report.
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 >>