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Brinker International, Inc. (EAT) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Brinker International (EAT - Free Report) ? Shares have been on the move with the stock up 7.2% over the past month. The stock hit a new 52-week high of $50.31 in the previous session. Brinker International has gained 15.1% since the start of the year compared to the 10.7% move for the Zacks Retail-Wholesale sector and the 3.2% return for the Zacks Retail - Restaurants industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on January 31, 2024, Brinker International reported EPS of $0.99 versus consensus estimate of $0.94 while it missed the consensus revenue estimate by 0.36%.
For the current fiscal year, Brinker International is expected to post earnings of $3.70 per share on $4.34 billion in revenues. This represents a 30.74% change in EPS on a 4.89% change in revenues. For the next fiscal year, the company is expected to earn $4.09 per share on $4.49 billion in revenues. This represents a year-over-year change of 10.57% and 3.54%, respectively.
Valuation Metrics
Brinker International may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Brinker International has a Value Score of A. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 13.4X current fiscal year EPS estimates, which is not in-line with the peer industry average of 22.5X. On a trailing cash flow basis, the stock currently trades at 7.5X versus its peer group's average of 10.5X. Additionally, the stock has a PEG ratio of 0.81. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Brinker International currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Brinker International passes the test. Thus, it seems as though Brinker International shares could have potential in the weeks and months to come.
How Does EAT Stack Up to the Competition?
Shares of EAT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is The ONE Group Hospitality, Inc. (STKS - Free Report) . STKS has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of F.
Earnings were strong last quarter. The ONE Group Hospitality, Inc. beat our consensus estimate by 21.43%, and for the current fiscal year, STKS is expected to post earnings of $0.20 per share on revenue of $368.36 million.
Shares of The ONE Group Hospitality, Inc. have gained 42.5% over the past month, and currently trade at a forward P/E of 27.85X and a P/CF of 7.2X.
The Retail - Restaurants industry is in the top 35% of all the industries we have in our universe, so it looks like there are some nice tailwinds for EAT and STKS, even beyond their own solid fundamental situation.
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Brinker International, Inc. (EAT) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Brinker International (EAT - Free Report) ? Shares have been on the move with the stock up 7.2% over the past month. The stock hit a new 52-week high of $50.31 in the previous session. Brinker International has gained 15.1% since the start of the year compared to the 10.7% move for the Zacks Retail-Wholesale sector and the 3.2% return for the Zacks Retail - Restaurants industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on January 31, 2024, Brinker International reported EPS of $0.99 versus consensus estimate of $0.94 while it missed the consensus revenue estimate by 0.36%.
For the current fiscal year, Brinker International is expected to post earnings of $3.70 per share on $4.34 billion in revenues. This represents a 30.74% change in EPS on a 4.89% change in revenues. For the next fiscal year, the company is expected to earn $4.09 per share on $4.49 billion in revenues. This represents a year-over-year change of 10.57% and 3.54%, respectively.
Valuation Metrics
Brinker International may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Brinker International has a Value Score of A. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 13.4X current fiscal year EPS estimates, which is not in-line with the peer industry average of 22.5X. On a trailing cash flow basis, the stock currently trades at 7.5X versus its peer group's average of 10.5X. Additionally, the stock has a PEG ratio of 0.81. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Brinker International currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Brinker International passes the test. Thus, it seems as though Brinker International shares could have potential in the weeks and months to come.
How Does EAT Stack Up to the Competition?
Shares of EAT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is The ONE Group Hospitality, Inc. (STKS - Free Report) . STKS has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of F.
Earnings were strong last quarter. The ONE Group Hospitality, Inc. beat our consensus estimate by 21.43%, and for the current fiscal year, STKS is expected to post earnings of $0.20 per share on revenue of $368.36 million.
Shares of The ONE Group Hospitality, Inc. have gained 42.5% over the past month, and currently trade at a forward P/E of 27.85X and a P/CF of 7.2X.
The Retail - Restaurants industry is in the top 35% of all the industries we have in our universe, so it looks like there are some nice tailwinds for EAT and STKS, even beyond their own solid fundamental situation.