We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Brinker (EAT) Down 11.1% Since the Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Brinker International, Inc. (EAT - Free Report) . Shares have lost about 11.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is the stock due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Brinker Beats on Q3 Earnings, Lags Sales
Brinker posted mixed third-quarter fiscal 2017 results wherein earnings beat the Zacks Consensus Estimate, while revenues lagged the same.
Share price of this TX-based casual-dining restaurant declined 2.7% in yesterday’s trading session following the release.
Earnings and Revenue Discussion
Adjusted earnings of $0.94 per share surpassed the Zacks Consensus Estimate of $0.85 cents by 10.6%. However, earnings decreased 6% year over year due to lower revenues and margins.
Quarterly revenues declined 1.7% year over year to $810.6 million due to lower comps, somewhat offset by increased restaurant capacity. Company sales decreased 1.8%, but franchise and other revenues increased 2.6%. Moreover, revenues missed the Zacks Consensus Estimate of $815.2 million by 0.6%.
In the reported quarter, comps declined 2.2% compared with a comps decline of 2.9% in the previous quarter.
Behind the Headline Numbers
Brinker International primarily engages in the ownership, operation, development and franchising of various restaurant brands under the names Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s).
Chili's
Chili's reported revenues of $689.6 million, down 2.0% year over year.
Chili's company-owned comps fell 2.3%, due to a 6.2% decline in traffic partially offset by a 2.9% and 1.0% improvement in pricing and mix, respectively. Comps compared favorably with the prior-quarter decline of 3.3% and 4.1% in the year-ago quarter.
Comps at its franchised restaurants went down 2.5% compared with a 1.7% decline in the year-ago quarter and 3.5% decrease in the last quarter.
Comps declined 7.1% in international franchised Chili’s restaurants wider than the year-ago quarter’s decrease of 0.7% and prior-quarter’s decline of 4.2%. However, the same rose in the domestic franchised units by 0.3% as against decline of 2.2% in the year-ago quarter and fall of 3% in the prior quarter.
Domestic comps (including company-owned and franchised) at Chili's declined 1.7% comparing favorably with the prior-quarter decline of 3.2%. The same was down 3.6% in the prior-year quarter.
Maggiano's
Maggiano's sales decreased 0.6% year over year to $101.0 million.
Maggiano's comps fell 1.6% in the quarter due to a 5.4% decline in traffic, partially offset by a 2.4% and 1.4% improvement in pricing and mix, respectively. Comps compared unfavorably with the prior-quarter decline of 0.8% and the year-ago comparable period growth of 0.2%.
Expenses and Margins
Total operating costs and expenses decreased barely 0.1% to $737.8 million from $738.4 million in the year-ago period.
Cost of sales margin improved nearly 120 basis points (bps), primarily reflecting increased menu pricing as well as favorable commodity pricing related to poultry and beef, partially offset by unfavorable menu item mix.
Restaurant labor margin was unfavorable 40 bps in the quarter, primarily due to wage rate increase, partially offset by lower manager bonuses.
Restaurant operating margin, as a percent of company sales, was unfavorable by 40 bps.
Fiscal 2017 Guidance
Brinker reaffirmed its previously issued guidance for fiscal 2017. It continues to expect earnings per share in the range of $3.05 to $3.15. Notably, the Zacks Consensus Estimate for fiscal 2017 earnings is pegged at $3.33.
Moreover, the company still anticipates comps growth to be down in the range of 1.5–2% for the full year. Restaurant operating margin is estimated to be down roughly 90 bps year over year on a 52-week basis, as expected earlier.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to three lower. While looking back an additional 30 days, we can see even more downside. There have been four downward revisions in the last two months.
At this time, Brinker's stock has a nice score of 'B' on both growth and momentum front. 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.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
While estimates have been moving downward, the magnitude of the revision is net zero. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Brinker (EAT) Down 11.1% Since the Last Earnings Report?
A month has gone by since the last earnings report for Brinker International, Inc. (EAT - Free Report) . Shares have lost about 11.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is the stock due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Brinker Beats on Q3 Earnings, Lags Sales
Brinker posted mixed third-quarter fiscal 2017 results wherein earnings beat the Zacks Consensus Estimate, while revenues lagged the same.
Share price of this TX-based casual-dining restaurant declined 2.7% in yesterday’s trading session following the release.
Earnings and Revenue Discussion
Adjusted earnings of $0.94 per share surpassed the Zacks Consensus Estimate of $0.85 cents by 10.6%. However, earnings decreased 6% year over year due to lower revenues and margins.
Quarterly revenues declined 1.7% year over year to $810.6 million due to lower comps, somewhat offset by increased restaurant capacity. Company sales decreased 1.8%, but franchise and other revenues increased 2.6%. Moreover, revenues missed the Zacks Consensus Estimate of $815.2 million by 0.6%.
In the reported quarter, comps declined 2.2% compared with a comps decline of 2.9% in the previous quarter.
Behind the Headline Numbers
Brinker International primarily engages in the ownership, operation, development and franchising of various restaurant brands under the names Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s).
Chili's
Chili's reported revenues of $689.6 million, down 2.0% year over year.
Chili's company-owned comps fell 2.3%, due to a 6.2% decline in traffic partially offset by a 2.9% and 1.0% improvement in pricing and mix, respectively. Comps compared favorably with the prior-quarter decline of 3.3% and 4.1% in the year-ago quarter.
Comps at its franchised restaurants went down 2.5% compared with a 1.7% decline in the year-ago quarter and 3.5% decrease in the last quarter.
Comps declined 7.1% in international franchised Chili’s restaurants wider than the year-ago quarter’s decrease of 0.7% and prior-quarter’s decline of 4.2%. However, the same rose in the domestic franchised units by 0.3% as against decline of 2.2% in the year-ago quarter and fall of 3% in the prior quarter.
Domestic comps (including company-owned and franchised) at Chili's declined 1.7% comparing favorably with the prior-quarter decline of 3.2%. The same was down 3.6% in the prior-year quarter.
Maggiano's
Maggiano's sales decreased 0.6% year over year to $101.0 million.
Maggiano's comps fell 1.6% in the quarter due to a 5.4% decline in traffic, partially offset by a 2.4% and 1.4% improvement in pricing and mix, respectively. Comps compared unfavorably with the prior-quarter decline of 0.8% and the year-ago comparable period growth of 0.2%.
Expenses and Margins
Total operating costs and expenses decreased barely 0.1% to $737.8 million from $738.4 million in the year-ago period.
Cost of sales margin improved nearly 120 basis points (bps), primarily reflecting increased menu pricing as well as favorable commodity pricing related to poultry and beef, partially offset by unfavorable menu item mix.
Restaurant labor margin was unfavorable 40 bps in the quarter, primarily due to wage rate increase, partially offset by lower manager bonuses.
Restaurant operating margin, as a percent of company sales, was unfavorable by 40 bps.
Fiscal 2017 Guidance
Brinker reaffirmed its previously issued guidance for fiscal 2017. It continues to expect earnings per share in the range of $3.05 to $3.15. Notably, the Zacks Consensus Estimate for fiscal 2017 earnings is pegged at $3.33.
Moreover, the company still anticipates comps growth to be down in the range of 1.5–2% for the full year. Restaurant operating margin is estimated to be down roughly 90 bps year over year on a 52-week basis, as expected earlier.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to three lower. While looking back an additional 30 days, we can see even more downside. There have been four downward revisions in the last two months.
Brinker International, Inc. Price and Consensus
Brinker International, Inc. Price and Consensus | Brinker International, Inc. Quote
VGM Scores
At this time, Brinker's stock has a nice score of 'B' on both growth and momentum front. 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.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
While estimates have been moving downward, the magnitude of the revision is net zero. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.