A month has gone by since the last earnings report for Brinker International (EAT Quick QuoteEAT - Free Report) . Shares have added about 6.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Brinker International due for a pullback? 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 drivers.

Brinker’s Q1 Earnings & Revenues Outshine Estimates

Brinker International reported first-quarter fiscal 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines 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 28 cents, surpassing the Zacks Consensus Estimate of 3 cents. The company reported an adjusted loss of 57 cents per share in the prior-year quarter.

In the fiscal first quarter, total revenues of $1,012.5 million beat the Zacks Consensus Estimate of $1,007 million. The top line improved 5.6% on a year-over-year basis. EAT gained from solid performance of Chili's.

Chili's

Chili’s revenues in the fiscal first quarter gained 6.4% year over year to $908.1 million. The upside was primarily driven by increased menu pricing and a favorable menu item mix. However, this was partially offset by lower traffic. Our model predicted segmental revenues to rise 5.4% year over year.

Chili's restaurant expenses (as a percentage of company sales) in the fiscal first quarter were 89.4% compared with 94.2% in the prior-year quarter. The downside was caused by sales leverage, menu pricing, favorable commodity mix, lower delivery and off-premise supplies. A rise in advertising expenses and hourly wage rates partially offset this.

Chili's company-owned traffic in the quarter declined 5.8% year over year. The metric fell 4.9% in the prior-year quarter. The segment’s company-owned comps jumped 6.1% in the fiscal first quarter from the year-ago levels. At Chili’s, domestic comps (including company-owned and franchised) rose 6% year over year compared with 3.4% in the prior year.

Maggiano’s

Maggiano’s sales declined 1.1% year over year to $104.4 million due to restaurant closures. This was partially overshadowed by favorable comparable restaurant sales driven by increased menu pricing.

Comps in the segment rose 2.6% year over year. Our projection was 6.9%. Traffic in the quarter fell 5.7% year over year. The metric was up 9.3% in the prior-year quarter.

Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal first quarter were 91.2% compared with 91.5% a year ago. Menu pricing and favorable commodity costs resulted in this downside.

Operating Results

Total operating costs and expenses were $988.3 million compared with $975.3 million in the year-ago quarter. Adjusted operating margin, as a percentage of company sales, was 10.4% compared with 6% in the prior-year quarter.

Balance Sheet

As of Sep 27, 2023, cash and cash equivalents amounted to $14.4 million compared with $19.5 million as of Sep 28, 2022. As of Sep 27, 2023, long-term debt was $923.9 million compared with $912.2 million as of Jun 28, 2023. Total shareholders’ deficit in the reported quarter was ($156.3) million compared with ($144.3) million in the previous quarter.

Fiscal 2024 Outlook

Management continues to anticipate total revenues in the range of $4.27-$4.35 billion. Capital expenditures are expected in the $175-$195 million band. EAT projects fiscal 2024 EPS in the range of $3.35-$3.65, up from the prior estimate of $3.15-$3.55.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted 6.61% due to these changes.

VGM Scores

At this time, Brinker International has a strong Growth Score of A, 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 20% 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. It comes with little surprise Brinker International has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Brinker International is part of the Zacks Retail - Restaurants industry. Over the past month, Chipotle Mexican Grill (CMG Quick QuoteCMG - Free Report) , a stock from the same industry, has gained 8.2%. The company reported its results for the quarter ended September 2023 more than a month ago.

Chipotle reported revenues of $2.47 billion in the last reported quarter, representing a year-over-year change of +11.3%. EPS of $11.36 for the same period compares with $9.51 a year ago.

For the current quarter, Chipotle is expected to post earnings of $9.60 per share, indicating a change of +15.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.2% over the last 30 days.

Chipotle has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.