Back to top

Image: Bigstock

Factors Setting the Tone for Brinker (EAT) in Q4 Earnings

Read MoreHide Full Article

Brinker International, Inc. (EAT - Free Report) is scheduled to report fourth-quarter fiscal 2018 numbers on Aug 14, before the opening bell.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 4.9%. Moreover, the average trailing four-quarter beat is 7.2%.

Q4 Expectations

The question lingering on investors’ minds is whether Brinker will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for fourth-quarter is pegged at $1.19 per share, higher than $1.09 in the year-ago quarter. Of late, the company’s earnings estimates have been stable. Meanwhile, the Zacks Consensus Estimate for revenues stands at $816 million, reflecting 0.7% increase from the prior-year quarter’s actual figure.

Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.

Factors at Play

Brinker’s aggressive expansion strategies and sales building initiatives like streamlining of menu and loyalty program are likely to boost results in fourth-quarter fiscal 2018. Increased focus on company-owned restaurants, which allows it to have full control over operations, is also expected to drive the company’s top- and bottom-line performance.

Moreover, Brinker remains steadfast in its goal to drive traffic and revenues through a range of sales-building initiatives such as streamlining of menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of better service platform.

Meanwhile, the digital wave has hit the U.S. fast-casual restaurant sector owing to an increase in number of restaurants that are deploying technology toward enhancing guest experience. Brinker is also investing heavily in technology-driven initiatives like online ordering to augment sales and improve guest services.

This apart, the company has now implemented handheld devices in all of California, having installed a table top technology at all the company-owned restaurants in partnership with Ziosk. As a result, efficiency and speed of services have increased. Additionally, Brinker effectively uses the social media platforms and email database to increase customer awareness and boost traffic.

Brinker International, Inc. Price, Consensus and EPS Surprise

Our Model Suggests a Beat

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Brinker has an Earnings ESP of +1.85% and a Zacks Rank #3, a combination that suggests that the company is likely to beat estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

McDonald's (MCD - Free Report) reported impressive second-quarter 2018 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings of $1.99 per share surpassed the consensus mark of $1.92 by 3.6% and increased 15% from the year-ago quarter (12% in constant currencies).

Darden (DRI - Free Report)     reported better-than-expected results in the fourth quarter of fiscal 2018. Adjusted earnings of $1.39 per share outpaced the consensus estimate of $1.35 by 3%. The bottom line also increased 17.8% year over year on the back of higher revenues.

Chipotle (CMG - Free Report) reported better-than-expected results for the second quarter of 2018. Adjusted earnings of $2.87 per share topped the Zacks Consensus Estimate of $2.78 by 3.2%. The bottom line also grew 23.7% from the year-ago quarter number backed by increased revenues and lower food costs.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Published in