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Why Is Brinker International (EAT) Down 12.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Brinker International (EAT - Free Report) . Shares have lost about 12.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Brinker International due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Brinker's Q3 Earnings Beat, Revenues Miss Estimates
Brinker reported third-quarter fiscal 2021 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The bottom line beat the consensus estimate for the sixth straight quarter. Moreover, the metrics declined year over year.
Earnings & Revenue Discussion
The company reported adjusted earnings per share of 78 cents, beating the Zacks Consensus Estimate of 77 cents. Notably, Brinker had reported adjusted earnings of $1.28 in the year-ago quarter.
Quarterly revenues of $828.4 million missed the consensus mark of $835.4 million. Also, the top line declined 3.7% on a year-over-year basis. Notably, the downside was primarily due to the pandemic affecting dining room sales.
Chili's
Chili’s revenues in the fiscal third quarter fell 1.4% year over year to $763.0 million, primarily due to lower traffic, dismal dining room sales and the impact of Winter Storm Uri. However, this was partly offset by increase in off-premise sales, which includes It's Just Wings.
Chili's company restaurant expenses (as a percentage of company sales) in the fiscal third quarter contracted to 85.7% year over year from 86.6%. The decrease was primarily due to lower advertising expenses, drop in hourly labor expenses, and favorable menu item mix, partially offset by higher expenses related to delivery fees and supplies in connection with growth in off-premise sales and higher manager bonus expenses.
In third-quarter fiscal 2021, company-owned comps remained flat in comparison to the prior-year quarter.
Comps at Chili's franchised restaurants increased 0.2% compared with a dip of 7.7% in the year-ago quarter. At international franchised Chili’s restaurants, the same fell 8.8% compared with the year-ago quarter’s decrease of 9.5%. Meanwhile, at the U.S. franchised units, comps increased 5.2% compared with the year-ago quarter’s decline of 6.3%.
At Chili's, domestic comps (including company-owned and franchised) increased 0.6% against the prior-year quarter’s decrease of 5.4%.
Maggiano's
Maggiano's sales slumped 30.2% year over year to $65.4 million primarily due to lower dining sales on account of COVID-19. However, this was partially mitigated by increased off-premise sales. Comps plunged 29.6% year over year.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal third quarter slightly narrowed to 91.2% compared with the prior-year quarter’s 91.9%. The decrease is mainly due to lower manager and hourly labor expenses, drop in repairs and maintenance expenses, contraction in variable rent expenses, favorable menu item mix, lower banquet expenses, drop in credit card fees, lower advertising expenses and reduced utilities expenses. However, these were partially negated by sales deleverage, higher expenses related to delivery fees and supplies in connection with growth in off-premise sales, higher manager bonus expenses and increased insurance expenses.
Operating Results
Total operating costs and expenses contracted to $776.2 million from $818.9 million in the year-ago quarter. Moreover, restaurant operating margin — as a percentage of company sales — was 14.3% compared with 13.4% in the prior-year quarter.
Balance Sheet
As of Mar 24, 2021, cash and cash equivalents amounted to $63.6 million compared with $167.2 million as on Mar 24, 2020.
Long-term debt was $1,017 million as of Mar 24, 2021, compared with $1,208.5 million on Jun 24, 2020. Total shareholders’ deficit in the reported quarter came in at ($390.6) million compared with ($479.1) million as of Jun 24, 2020.
Q4 Outlook
For the fourth quarter of fiscal 2021, the company expects revenues in the band of $950 million to $1.0 billion. Earnings per share, excluding special items, for fourth-quarter fiscal 2021 are projected in the range of $1.55 to $170. For the fourth quarter of fiscal 2021, the company expects diluted weighted average shares outstanding in the range of $47-$48 million.
Due to the uncertainties caused by the pandemic, the company anticipates operating results to slightly deviate from the projected range.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 29.34% due to these changes.
VGM Scores
Currently, Brinker International has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Brinker International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Brinker International (EAT) Down 12.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Brinker International (EAT - Free Report) . Shares have lost about 12.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Brinker International due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Brinker's Q3 Earnings Beat, Revenues Miss Estimates
Brinker reported third-quarter fiscal 2021 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The bottom line beat the consensus estimate for the sixth straight quarter. Moreover, the metrics declined year over year.
Earnings & Revenue Discussion
The company reported adjusted earnings per share of 78 cents, beating the Zacks Consensus Estimate of 77 cents. Notably, Brinker had reported adjusted earnings of $1.28 in the year-ago quarter.
Quarterly revenues of $828.4 million missed the consensus mark of $835.4 million. Also, the top line declined 3.7% on a year-over-year basis. Notably, the downside was primarily due to the pandemic affecting dining room sales.
Chili's
Chili’s revenues in the fiscal third quarter fell 1.4% year over year to $763.0 million, primarily due to lower traffic, dismal dining room sales and the impact of Winter Storm Uri. However, this was partly offset by increase in off-premise sales, which includes It's Just Wings.
Chili's company restaurant expenses (as a percentage of company sales) in the fiscal third quarter contracted to 85.7% year over year from 86.6%. The decrease was primarily due to lower advertising expenses, drop in hourly labor expenses, and favorable menu item mix, partially offset by higher expenses related to delivery fees and supplies in connection with growth in off-premise sales and higher manager bonus expenses.
In third-quarter fiscal 2021, company-owned comps remained flat in comparison to the prior-year quarter.
Comps at Chili's franchised restaurants increased 0.2% compared with a dip of 7.7% in the year-ago quarter. At international franchised Chili’s restaurants, the same fell 8.8% compared with the year-ago quarter’s decrease of 9.5%. Meanwhile, at the U.S. franchised units, comps increased 5.2% compared with the year-ago quarter’s decline of 6.3%.
At Chili's, domestic comps (including company-owned and franchised) increased 0.6% against the prior-year quarter’s decrease of 5.4%.
Maggiano's
Maggiano's sales slumped 30.2% year over year to $65.4 million primarily due to lower dining sales on account of COVID-19. However, this was partially mitigated by increased off-premise sales. Comps plunged 29.6% year over year.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal third quarter slightly narrowed to 91.2% compared with the prior-year quarter’s 91.9%. The decrease is mainly due to lower manager and hourly labor expenses, drop in repairs and maintenance expenses, contraction in variable rent expenses, favorable menu item mix, lower banquet expenses, drop in credit card fees, lower advertising expenses and reduced utilities expenses. However, these were partially negated by sales deleverage, higher expenses related to delivery fees and supplies in connection with growth in off-premise sales, higher manager bonus expenses and increased insurance expenses.
Operating Results
Total operating costs and expenses contracted to $776.2 million from $818.9 million in the year-ago quarter. Moreover, restaurant operating margin — as a percentage of company sales — was 14.3% compared with 13.4% in the prior-year quarter.
Balance Sheet
As of Mar 24, 2021, cash and cash equivalents amounted to $63.6 million compared with $167.2 million as on Mar 24, 2020.
Long-term debt was $1,017 million as of Mar 24, 2021, compared with $1,208.5 million on Jun 24, 2020. Total shareholders’ deficit in the reported quarter came in at ($390.6) million compared with ($479.1) million as of Jun 24, 2020.
Q4 Outlook
For the fourth quarter of fiscal 2021, the company expects revenues in the band of $950 million to $1.0 billion. Earnings per share, excluding special items, for fourth-quarter fiscal 2021 are projected in the range of $1.55 to $170. For the fourth quarter of fiscal 2021, the company expects diluted weighted average shares outstanding in the range of $47-$48 million.
Due to the uncertainties caused by the pandemic, the company anticipates operating results to slightly deviate from the projected range.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 29.34% due to these changes.
VGM Scores
Currently, Brinker International has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Brinker International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.