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Brinker (EAT) Stock Rises 51% in a Year: More Room to Run?
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Shares of Brinker International, Inc. (EAT - Free Report) have gained 51.3% in the past year compared with the industry’s increase of 34.1%. The company is benefiting from increased menu pricing, higher dine-in traffic and a favorable menu item mix. Also, its expansion initiatives and digital efforts bode well.
However, commodity price and wage inflation, and slow international market continue to impact EAT’s growth negatively. Let’s delve deeper.
Growth Drivers
Brinker remains steadfast in its goal to drive traffic and revenues through a range of sales-building initiatives. The efforts include streamlining of menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of better service platform.
EAT continues to focus on consumer convenience, as it expects the momentum to continue in the upcoming periods as well. Moreover, management stated that its dining rooms business is starting to surpass the pre-pandemic levels, subject to normalization of the current scenario. It continues with its multi-channel strategies, thereby driving traffic.
Brinker is focusing on expansion efforts to drive growth. During third-quarter fiscal 2023, it opened 10 new stores, including three company-owned restaurants and seven franchises. In fiscal 2023, it expects to open 14 company-owned restaurants and 17-21 franchise-operated stores.
The Zacks Rank #3 (Hold) company is also investing heavily in technology-driven initiatives, like online ordering, to augment sales and boost guest services. Meanwhile, EAT has made progress with its robotics technology — Rita — and incorporated it into its new service model. The initiative allows the company to run higher volume restaurants supported by technological advantages as well as leverage in handhelds and food runners. Given the efficiency gains, Brinker intends to expand technology to additional restaurants in the upcoming periods.
Image Source: Zacks Investment Research
Concerns
Rise in food and beverage costs and restaurant labor expenses including wage rates continues to impact the company negatively. Higher repair and maintenance expenses along with increased property tax and utility expenses are added concerns.
Total operating costs and expenses in third-quarter fiscal 2023 were $1,019 million compared with $931 million reported in the year-ago quarter. The restaurant operating margin, as a percentage of company sales, was 13.4% in fiscal third quarter.
Key Picks
Here we present some better-ranked stocks from the Zacks Retail and Wholesale sector.
The Zacks Consensus Estimate for MELI’s 2023 sales and EPS indicates rises of 27.6% and 75%, respectively, from the year-ago period’s levels.
Abercrombie & Fitch Co. (ANF - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 480.6%, on average. Shares of ANF have surged 91.1% in the past year.
The Zacks Consensus Estimate for ANF’s 2023 sales and EPS indicates growth of 3.4% and 660%, respectively, from the year-ago period’s levels.
Chipotle Mexican Grill, Inc. (CMG - Free Report) sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 4.7%, on average. Shares of CMG have increased 64.7% in the past year.
The Zacks Consensus Estimate for CMG’s 2023 sales and EPS indicates gains of 14% and 34%, respectively, from the year-ago period’s levels.
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Brinker (EAT) Stock Rises 51% in a Year: More Room to Run?
Shares of Brinker International, Inc. (EAT - Free Report) have gained 51.3% in the past year compared with the industry’s increase of 34.1%. The company is benefiting from increased menu pricing, higher dine-in traffic and a favorable menu item mix. Also, its expansion initiatives and digital efforts bode well.
However, commodity price and wage inflation, and slow international market continue to impact EAT’s growth negatively. Let’s delve deeper.
Growth Drivers
Brinker remains steadfast in its goal to drive traffic and revenues through a range of sales-building initiatives. The efforts include streamlining of menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of better service platform.
EAT continues to focus on consumer convenience, as it expects the momentum to continue in the upcoming periods as well. Moreover, management stated that its dining rooms business is starting to surpass the pre-pandemic levels, subject to normalization of the current scenario. It continues with its multi-channel strategies, thereby driving traffic.
Brinker is focusing on expansion efforts to drive growth. During third-quarter fiscal 2023, it opened 10 new stores, including three company-owned restaurants and seven franchises. In fiscal 2023, it expects to open 14 company-owned restaurants and 17-21 franchise-operated stores.
The Zacks Rank #3 (Hold) company is also investing heavily in technology-driven initiatives, like online ordering, to augment sales and boost guest services. Meanwhile, EAT has made progress with its robotics technology — Rita — and incorporated it into its new service model. The initiative allows the company to run higher volume restaurants supported by technological advantages as well as leverage in handhelds and food runners. Given the efficiency gains, Brinker intends to expand technology to additional restaurants in the upcoming periods.
Image Source: Zacks Investment Research
Concerns
Rise in food and beverage costs and restaurant labor expenses including wage rates continues to impact the company negatively. Higher repair and maintenance expenses along with increased property tax and utility expenses are added concerns.
Total operating costs and expenses in third-quarter fiscal 2023 were $1,019 million compared with $931 million reported in the year-ago quarter. The restaurant operating margin, as a percentage of company sales, was 13.4% in fiscal third quarter.
Key Picks
Here we present some better-ranked stocks from the Zacks Retail and Wholesale sector.
MercadoLibre, Inc. (MELI - Free Report) sports a Zacks Rank #1 (Strong Buy). MELI has a trailing four-quarter earnings surprise of 35%, on average. Shares of MELI have gained 92.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MELI’s 2023 sales and EPS indicates rises of 27.6% and 75%, respectively, from the year-ago period’s levels.
Abercrombie & Fitch Co. (ANF - Free Report) flaunts a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 480.6%, on average. Shares of ANF have surged 91.1% in the past year.
The Zacks Consensus Estimate for ANF’s 2023 sales and EPS indicates growth of 3.4% and 660%, respectively, from the year-ago period’s levels.
Chipotle Mexican Grill, Inc. (CMG - Free Report) sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 4.7%, on average. Shares of CMG have increased 64.7% in the past year.
The Zacks Consensus Estimate for CMG’s 2023 sales and EPS indicates gains of 14% and 34%, respectively, from the year-ago period’s levels.