Brinker International, Inc.
) has delivered eight straight positive earnings surprises with an
average beat of almost 11.6%. This casual dining restaurant
operator has gained about 76.0% in a year's time and expects
earnings per share to increase two-fold by 2015. Solid fiscal
fourth-quarter results, a decent dividend yield of 2.2% and a share
buyback program make this Zacks #2 Rank (Buy) a good pick for
investors seeking growth and income.
A Robust End to Fiscal 2012
On August 9, Brinker reported solid fourth quarter fiscal 2012
results with adjusted earnings of 61 cents per share, surpassing
the Zacks Consensus Estimate of 58 cents by 5.2% and last year's
earnings of 48 cents by 27.1%. The better-than-expected results
were driven chiefly by a strong top-line as well as unit growth.
Total revenue crept higher 1.5% year over year to $728.4 million,
due to a rise (+2.2%) in comparable restaurant sales at Chili's
Grill & Bar restaurant for the fifth consecutive quarter and an
upside (+1.9%) at Maggiano's for the 10th time in a row. Moreover,
comparable restaurant sales at franchised restaurants advanced
2.1%, aided by growth of 2.4% and 1.3% in franchised domestic and
For fiscal 2012, the company reported adjusted earnings of $158.0
million or $1.96 per share, versus $140.1 million or $1.52 in the
prior year. Total revenue grew 28% to $784.5 million.
Impressive Outlook for 2013
For 2013, Brinker expects adjusted earnings of $2.30 to $2.45, up
17% to 25%. The company anticipates comparable restaurant sales for
the full year to increase 2% - 3% year over year and operating
margin to expand by 100 bps.
Strong Earnings Momentum
This Zacks #2 Rank (Buy) stock has experienced significant upward
estimate revisions over the past 60 days. The Zacks Consensus
Estimate for fiscal 2013 is up 3.1% to $2.35, while the Zacks
Consensus Estimate for 2014 increased 3.5% to $2.67. The outlooks
for 2013 and 2014 represent year-over-year advances of 19.9% and
Dividend Portraying Strength
Brinker is one of the few casual dining chains to pay a regular
dividend, even amidst the latest recession. The latest hike of 25%
was announced in August 2012. Currently, the company pays a
quarterly dividend of 20 cents per share, affirming a dividend
yield of 2.2%. Since 2006, the company has raised its dividend 5
times from a meager 6.7 cents.
Moreover, the company continues to repurchase shares from time to
time. On the same day of the latest dividend hike, Brinker extended
its share buyback program by an additional $500 million. Brinker's
commitment toward enhancing shareholders' returns reflects its
sound liquidity position and well defined future prospects.
Valuation Looks Reasonable
The stock is going for about 15.14x the forward estimate for fiscal
2013, a 27.9% discount to the peer group average of 20.99x. Its
price to sales ratio of 0.93 is almost in-line with what similar
Moreover, the stock also looks attractive given a trailing 12-month
ROE of 45.6%, which is higher than the peer group average of 26.5%.
Its PEG ratio is 1.11 based on a 5-year EPS growth rate of 13.6%.
Since November 28, 2011, Brinker shares have fared relatively
better than the simple moving average for 50 days or SMA (50).
Moreover, since November 30, 2011, Brinker shares have consistently
fared better than the simple moving average for 200 days or SMA
(200). The year-to-date return for the stock is noteworthy at 33.0%
compared to an S&P 500 tally of 14.0%.
With a positive sales momentum, rising earnings estimates, strong
growth projections, stable liquidity position and a healthy
dividend yield, Brinker offers an enticing upside potential going
forward. Moreover, a continued focus on international expansion and
prudent cost-control measures bode well for its long-term growth.
Based in Dallas, Texas, and founded in 1977, Brinker remains one of
the strongest long-term players in the casual dining segment. As of
June 27, 2012, the company owns, operates or franchises around
1,536 Chili's Grill & Bar restaurants and around 45 Maggiano's
Little Italy restaurants. With a market capitalization of $2.63
billion, Brinker primarily competes with Darden Restaurants, Inc. (
) and DineEquity, Inc. (
BRINKER INTL (EAT): Free Stock Analysis Report
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