Brinker International has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 11.4% to $185.23 per share while the index has gained 8.4%.
Is EAT a buy right now? Find out in our full research report, it’s free.
Why Does EAT Stock Spark Debate?
Founded by Norman Brinker in Dallas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Two Positive Attributes:
1. Surging Same-Store Sales Show Increasing Demand
Same-store sales is a key performance indicator used to measure organic growth at restaurants open for at least a year.
Brinker International has been one of the most successful restaurant chains over the last two years thanks to skyrocketing demand within its existing dining locations. On average, the company has posted exceptional year-on-year same-store sales growth of 15.5%.
2. Economies of Scale Give It Negotiating Leverage with Suppliers
With $5.73 billion in revenue over the past 12 months, Brinker International is one of the larger restaurant chains in the industry and benefits from a well-known brand that influences consumer purchasing decisions.
One Reason to Be Careful:
Lack of New Restaurants, a Headwind for Revenue
A restaurant chain’s total number of dining locations often determines how much revenue it can generate.
Brinker International operated 1,632 locations in the latest quarter, and over the last two years, has kept its restaurant count flat while other restaurant businesses have opted for growth.
When a chain doesn’t open many new restaurants, it usually means there’s stable demand for its meals and it’s focused on improving operational efficiency to increase profitability.
Final Judgment
Brinker International’s merits more than compensate for its flaws. At $185.23 per share (or 15.2× forward P/E), is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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