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Brinker (EAT) Stock Up 23% in 6 Months: More Upside Left?
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Brinker International, Inc. (EAT - Free Report) is poised to benefit from solid Chili's performance, digital efforts and expansion initiatives. This and a focus on sales-building initiatives bode well.
In the past six months, shares of Brinker have gained 22.6% compared with the industry’s 2% growth. An upward revision in earnings estimates for fiscal 2023 reflects analysts’ optimism regarding the company’s growth potential. In the past 60 days, the Zacks Consensus Estimate for fiscal 2023 earnings has moved up 5.8% to $2.72 per share.
Factors Driving Growth
Chili's has been a major growth driver for the company. Chili’s turn-around strategies generated positive results, with sales moving in a positive direction. These strategies are focused on simplifying Chili’s core menu by improving recipes, strengthening value proposition with higher-quality ingredients and incorporating new cooking techniques to deliver better food at more compelling prices.
Image Source: Zacks Investment Research
During the fiscal second quarter, Chili’s revenues increased 8.7% year over year to $878.7 million. The upside can be attributed to increased menu pricing and the acquisition of 68 restaurants in fiscal 2022, marginally offset by lower traffic. During the quarter, domestic comps at Chilli’s (including company-owned and franchised) rose 7.5% year over year. The company emphasizes on the brand's new restaurant development to drive growth.
In fiscal 2022, the company acquired 68 Chili’s restaurants from three former franchisees located in the Mid-Atlantic, Great Lakes and Northwest regions of the United States. The company ramped up Chili's development plans with a pipeline of more than 20 new full-size restaurants. Also, it initiated testing of small footprint off-premise-centric designs with a focus on densely-populated markets. During the second quarter of fiscal 2023, the company added four new restaurants. Also, it stated positive customer feedback with respect to its restaurants in San Juan, Texas, Inverness, Florida, Owensboro and Kentucky. The company intends to open seven new Chili’s restaurants in the remainder of fiscal 2023. EAT believes that more focus on sales channel expansion and brand-building awareness is likely to drive growth in the upcoming periods.
The company 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.
Brinker is steadfast in its goal to drive traffic and revenues through sales-building initiatives such as streamlining the menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introducing a better service platform. The company initiated innovation efforts to upgrade its kitchen. It started testing new equipment that delivers better products efficiently and boosts volumes. The company is positioned to invest aggressively to grow its business in fiscal 2023 and beyond. In the coming year, Brinker is expected to look for more ways to offer convenience, value, and a great guest experience by doubling its pipeline of new restaurant openings and expanding its portfolio of brands.
Some other top-ranked stocks in the same space include Chuy's Holdings, Inc. (CHUY - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Bloomin' Brands, Inc. (BLMN - Free Report) .
Chuy’s Holdings currently sports a Zacks Rank #1. CHUY has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have increased 28.2% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 10.8% and 19%, respectively, from the corresponding year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2. ARCO has a long-term earnings growth of 11.6%. Shares of the company have increased 10.2% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS suggests growth of 8.1% and 4.2%, respectively, from the year-ago period’s levels.
Bloomin' Brands carries a Zacks Rank #2. BLMN has a long-term earnings growth rate of 12.3%. The stock has gained 26.1% in the past year.
The Zacks Consensus Estimate for Bloomin' Brands 2024 sales and EPS suggests growth of 2.1% and 4.4%, respectively, from the year-ago period’s reported levels.
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Brinker (EAT) Stock Up 23% in 6 Months: More Upside Left?
Brinker International, Inc. (EAT - Free Report) is poised to benefit from solid Chili's performance, digital efforts and expansion initiatives. This and a focus on sales-building initiatives bode well.
In the past six months, shares of Brinker have gained 22.6% compared with the industry’s 2% growth. An upward revision in earnings estimates for fiscal 2023 reflects analysts’ optimism regarding the company’s growth potential. In the past 60 days, the Zacks Consensus Estimate for fiscal 2023 earnings has moved up 5.8% to $2.72 per share.
Factors Driving Growth
Chili's has been a major growth driver for the company. Chili’s turn-around strategies generated positive results, with sales moving in a positive direction. These strategies are focused on simplifying Chili’s core menu by improving recipes, strengthening value proposition with higher-quality ingredients and incorporating new cooking techniques to deliver better food at more compelling prices.
Image Source: Zacks Investment Research
During the fiscal second quarter, Chili’s revenues increased 8.7% year over year to $878.7 million. The upside can be attributed to increased menu pricing and the acquisition of 68 restaurants in fiscal 2022, marginally offset by lower traffic. During the quarter, domestic comps at Chilli’s (including company-owned and franchised) rose 7.5% year over year. The company emphasizes on the brand's new restaurant development to drive growth.
In fiscal 2022, the company acquired 68 Chili’s restaurants from three former franchisees located in the Mid-Atlantic, Great Lakes and Northwest regions of the United States. The company ramped up Chili's development plans with a pipeline of more than 20 new full-size restaurants. Also, it initiated testing of small footprint off-premise-centric designs with a focus on densely-populated markets. During the second quarter of fiscal 2023, the company added four new restaurants. Also, it stated positive customer feedback with respect to its restaurants in San Juan, Texas, Inverness, Florida, Owensboro and Kentucky. The company intends to open seven new Chili’s restaurants in the remainder of fiscal 2023. EAT believes that more focus on sales channel expansion and brand-building awareness is likely to drive growth in the upcoming periods.
The company 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.
Brinker is steadfast in its goal to drive traffic and revenues through sales-building initiatives such as streamlining the menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introducing a better service platform. The company initiated innovation efforts to upgrade its kitchen. It started testing new equipment that delivers better products efficiently and boosts volumes. The company is positioned to invest aggressively to grow its business in fiscal 2023 and beyond. In the coming year, Brinker is expected to look for more ways to offer convenience, value, and a great guest experience by doubling its pipeline of new restaurant openings and expanding its portfolio of brands.
Zacks Rank & Other Key Picks
Brinker currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the same space include Chuy's Holdings, Inc. (CHUY - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Bloomin' Brands, Inc. (BLMN - Free Report) .
Chuy’s Holdings currently sports a Zacks Rank #1. CHUY has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have increased 28.2% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 10.8% and 19%, respectively, from the corresponding year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2. ARCO has a long-term earnings growth of 11.6%. Shares of the company have increased 10.2% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS suggests growth of 8.1% and 4.2%, respectively, from the year-ago period’s levels.
Bloomin' Brands carries a Zacks Rank #2. BLMN has a long-term earnings growth rate of 12.3%. The stock has gained 26.1% in the past year.
The Zacks Consensus Estimate for Bloomin' Brands 2024 sales and EPS suggests growth of 2.1% and 4.4%, respectively, from the year-ago period’s reported levels.