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Brinker to Post Q2 Earnings: What's in the Cards for the Stock?

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Brinker International, Inc. (EAT - Free Report) is scheduled to report second-quarter fiscal 2025 results on Jan. 29, 2025, before the opening bell.

In the last reported quarter, adjusted earnings and revenues topped the Zacks Consensus Estimate by 37.7% and 4.1%, respectively. On a year-over-year basis, both metrics increased 239.3% and 12.5%, respectively.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, delivering an average surprise of 12.1%.

Trend in Estimate Revision 

The Zacks Consensus Estimate for fiscal second-quarter EPS has increased to $1.69 from $1.62 in the past seven days. The expected figure indicates a rise of 70.7% from the year-ago quarter’s 99 cents per share.

The consensus mark for revenues is pegged at $1.24 billion. The metric suggests growth of 15.1% from the year-ago quarter’s figure.

Factors Likely to Shape Brinker’s Quarterly Results

Revenues

Brinker’s fiscal second-quarter revenues are likely to have increased year over year, fueled by effective marketing strategies, improved menu pricing, higher traffic and a favorable menu item mix. The company’s focus on enhancing core menu offerings at Chili’s, such as its “core four” and “five to drive” strategies, is expected to have boosted top-line performance. Additionally, Maggiano’s operational improvements, including service speed enhancements and menu updates, are likely to have contributed to sales growth.

Brinker’s digitalization initiatives, including improved order management systems, are expected to have streamlined operations and enhanced customer experience in the fiscal second quarter. This and the emphasis on social media campaigns targeting younger demographics might have contributed to guest check and comps growth in the to-be-reported quarter. Our model predicts fiscal second-quarter comps to rise 10.1% year over year.

Our model predicts Chili’s revenues to grow 9.3% year over year to $1.01 billion, while Maggiano’s revenues are estimated to increase 2.9% to $151.2 million. The combined impact of pricing strategies, menu innovation, and operational upgrades is anticipated to have strengthened EAT’s fiscal second-quarter revenue base.

Margins

Brinker’s bottom line is anticipated to have improved year over year, supported by strategic pricing initiatives, effective cost management and a focus on higher-margin menu items. The company’s emphasis on balancing value offerings (with margin expansion), adapting to changing consumer preferences and continued menu innovation are expected to have supported margin growth in the to-be-reported quarter.

However, inflationary pressures on labor and commodities, along with elevated operating costs, could have partially offset margin gains. Rising input costs and strategic investments in technology upgrades might have weighed on the company’s profitability in the fiscal second quarter. Our model predicts total operating costs to increase 6.6% year over year to $1.08 billion.

What Our Model Says About EAT Stock

Our proven model predicts an earnings beat for Brinker this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

EAT’s Earnings ESP: Brinker has an Earnings ESP of +9.99%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

EAT’s Zacks Rank: The company has a Zacks Rank #2.

Other Stocks With the Favorable Combination

Here are some other stocks worth considering from the Zacks Retail-Wholesale sector, as our model shows that these have the right combination of elements to post an earnings beat this reporting cycle.

Chipotle Mexican Grill, Inc. (CMG - Free Report) has an Earnings ESP of +1% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

CMG’s earnings for the to-be-reported quarter are expected to increase 14.3% year over year. It reported better-than-expected earnings in each of the trailing four quarters, with an average surprise of 9.8%.

The Cheesecake Factory Incorporated (CAKE - Free Report) currently has an Earnings ESP of +2.20% and a Zacks Rank of 2.

CAKE’s earnings for the to-be-reported quarter are expected to increase 13.8% year over year. It reported better-than-expected earnings in each of the trailing four quarters, with an average earnings surprise of 14.1%.

CAVA Group, Inc. (CAVA - Free Report) has an Earnings ESP of +8.89% and a Zacks Rank of 3 at present.

CAVA’s earnings for the to-be-reported quarter are expected to increase 200% year over year. It reported better-than-expected earnings in each of the trailing four quarters, delivering an average surprise of 91.8%.

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