Shares of Brinker International, Inc. (EAT) hit a new 52-week high of $55.80 in the second half of the trading session on Nov 25, based on improved fiscal first-quarter 2015. The company’s closing price of $55.62 reflects a year-to-date return of over 23.8%. The trading volume for the session was nearly 1.1 billion shares.
Shares of Brinker International rose nearly 12.3% in response to the impressive first-quarter results reported on Oct 21.
Brinker International’s adjusted earnings of 50 cents per share were in line with the Zacks Consensus Estimate. However, the quarterly figure increased 16.3% year over year backed by improved revenues and a decline in interest expenses.
Quarterly revenues edged up 3.8% year over year to $711.0 million and beat the Zacks Consensus Estimate of $708.0 million by 0.4%. The upside reflects a 3.4% increase in company sales and a 19.8% rise in Franchise and Other revenues, owing to higher comps.
Company-owned comps were up 2.4%, better than the prior-year quarter decline of 1.3% and third-quarter comps growth of 2.3%, driven by improved comps at Maggiano's as well as Chili’s.
Despite only a 0.1% rise in traffic, Chili's’ company-owned comps increased 2.6%, attributable to a positive pricing impact. Domestic comps at Chili's increased 2.3%, better than the prior-quarter increase of 2.1% as well as the year-ago quarter decline of 1.9%, backed by menu innovations.
Comps at Chili’s’ franchised restaurants were up 1%, comparing favorably with comps decline of 1% in the year-ago quarter but unfavorably with comps growth of 1.2% in the prior quarter. Domestic comps growth of 1.7% as against 1.4% in the prior quarter made up for the international franchised comps decline of 0.5%, which compared unfavorably with 0.8% comps growth in the year-ago quarter.
Comps at Maggiano's went up 0.6%, flat with the year-ago quarter but compared unfavorably with the prior-quarter comps growth of 0.9%. Comps at Maggiano's reflect favorable menu pricing impact and traffic.
Operating margin improved approximately 50 bps to 7.8% due to improved margin at Chili’s.
Brinker International also reaffirmed the fiscal 2015 guidance. The company expects earnings in the range of $3.00 to $3.15 per share, up 11% to 16% year over year. By 2017, it expects to achieve earnings per share of $4.00, doubling from the 2012 level. The company expects total revenue to increase 4% year over year in fiscal 2015. This reflects comps increase in the range of 1% to 2% and franchise and other revenue increase of about 15%.
Brinker International currently carries a Zacks Rank #3 (Hold). The following companies with a favorable Zacks Rank that are worth considering include DineEquity, Inc. (DIN), BJ's Restaurants, Inc. (BJRI) and Ruby Tuesday, Inc. (RT). All these stocks sport a Zacks Rank #1 (Strong Buy).
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