Brinker Continues Steady Performance


The earnings growth ofBrinker International ( EAT ) doesn't match up to the industry's hottest stocks. But it is steady, something income investors can appreciate.

Brinker's three-year earnings growth rate is 25%. That's solid but not quite good enough for the top 10 of the industry.

More important could be Brinker's Earnings Stability Factor of 2 -- a nearly perfect score.

The stock is trading at new highs as it continues a yearslong upward trend in which the deepest correction (in 2009) was 38%.

Brinker operates more than 1,500 restaurants. Most of them are Chili's, plus 44 are Maggiano's Little Italy stores.

The company pays a quarterly dividend of 20 cents a share, for an annualized yield of about 2%. The dividend was raised the past three years.

Same-store sales in the March-ended quarter fell 1.1%. Restaurant operating margin improved to 17.9% from 17.2%.

Analysts made bullish comments last week.

On Friday, Standard & Poor's raised its target price for the stock by 12 points to 47. (It closed Friday at 40.74.) S&P also raised its estimate for June-ending fiscal year earnings to $2.33 and for the fiscal year 2014 to $2.75.

"Although the sales environment remains challenging near term, we believe same-store sales will be slightly positive for the rest of 2013, as the economy continues to improve," Jim Yin, an analyst at S&P Capital IQ, wrote in a report.

Yin also expects wider operating margins in the current and next fiscal years, citing better productivity and cost controls on marketing and general administrative expenses.

The previous day, Raymond James raised its target price on Brinker to 45 from 42.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: EAT

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