It has been about a month since the last earnings report for Brinker International (EAT Quick QuoteEAT - Free Report) . Shares have lost about 2.7% 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 Q4 Earnings Surpass Estimates, Revenues Lag

Brinker International reported fourth-quarter fiscal 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis. The upside was primarily driven by improved menu pricing and a favorable menu item mix.

Earnings & Revenue Discussion

In the quarter under review, Brinker reported adjusted earnings per share (EPS) of $1.39, surpassing the Zacks Consensus Estimate of $1.30. The company reported an adjusted EPS of $1.15 in the prior-year quarter.

In the fiscal fourth quarter, total revenues of $1,075.5 million missed the Zacks Consensus Estimate of $1,079 million. However, the top line increased 5.3% on a year-over-year basis. The company gained from the solid performance of Chili's and Maggiano's.

Chili's

Chili’s revenues in the fiscal fourth quarter increased 5.5% year over year to $954.1 million. The upside was primarily driven by increased menu pricing and a favorable menu item mix. However, this was partially offset by lower traffic.

Chili's restaurant expenses (as a percentage of company sales) in the fiscal fourth quarter came in at 87.1% year over year compared with 88% reported in the prior-year quarter. The downside was primarily due to sales leverage, menu pricing, favorable commodity mix, lower delivery and off-premise supplies. A rise in commodity costs, advertising expenses and hourly wage rates partially offset this.

Chili's company-owned traffic in the quarter declined 7.7% year over year compared with a fall of 5.7% reported in the prior-year quarter.

The segment’s company-owned comps increased 6.3% in the fiscal fourth quarter from the year-ago quarter’s levels.

At Chili’s, domestic comps (including company-owned and franchised) rose 6% year over year compared with 0.1% rise in the prior-year quarter’s levels.

Maggiano’s

Maggiano’s sales rose 3.5% year over year to $121.2 million. the upside was driven by a rise in menu pricing. However, this was partially offset by unfavorable menu item mix and lower traffic. Comps in the segment increased 9.1% year over year. Traffic in the quarter fell 0.2% year over year against a 17.9% rise reported in the prior-year quarter.

Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal fourth quarter were 82.7% compared with 84% reported in the prior-year quarter. The downside was primarily due to sales leverage and lower advertising. However, this was partially offset by higher hourly wage rates.

Operating Results

Total operating costs and expenses in the fiscal fourth quarter were $1,016.2 million compared with $976.8 million reported in the year-ago quarter. The restaurant operating margin, as a percentage of company sales, was 13.4% compared with 12.5% reported in the prior-year quarter.

Balance Sheet

As of Jun 28, 2023, cash and cash equivalents amounted to $15.1 million compared with $13.8 million as of Mar 29, 2023.

Long-term debt as of Jun 28, 2023, was $912.2 million compared with $930.7 million as of Mar 29, 2023. The total shareholders’ deficit in the reported quarter was ($144.3) million compared with ($210.3) million reported in the previous quarter.

2023 Highlights

Total revenues in fiscal 2023 amounted to $4,133.2 million compared with $3,804.1 million in fiscal 2022.

Adjusted EBITDA in fiscal 2023 came in at $345.6 million compared with $355.1 million in fiscal 2022.

In fiscal 2023, diluted EPS came in at $2.83 per share compared with $3.09 reported in the previous year.

Fiscal 2024 Outlook

For fiscal 2024, the company anticipates total revenues in the range of $4.27-$4.35 billion. Capital expenditures are expected in the range of $175-$195 million. The company expects fiscal 2023 diluted EPS in the range of $3.15-$3.55.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Brinker International has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, 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 has been net zero. Notably, Brinker International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Brinker International belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, Yum Brands (YUM Quick QuoteYUM - Free Report) , has gained 1.4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.

Yum reported revenues of $1.69 billion in the last reported quarter, representing a year-over-year change of +3.1%. EPS of $1.41 for the same period compares with $1.05 a year ago.

Yum is expected to post earnings of $1.26 per share for the current quarter, representing a year-over-year change of +15.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Yum. Also, the stock has a VGM Score of C.