Why Bloomin' Brands Is Sagging 10% Today

What happened

Shares of Bloomin' Brands (NASDAQ: BLMN) were tumbling 10% lower in midday trading Friday, after the company reported fiscal third-quarter earnings that beat Wall Street estimates on the top and bottom line.

So what

This seems to be a case of buy the rumor and sell the news for the owner of the Outback Steakhouse chain, because the restaurant operator said sales were doing better and its quarterly loss was narrower than expected.

Outback Steakhouse restaurant

Image source: Bloomin' Brands.

Bloomin' Brands reported revenue of $771 million compared with forecasts of just $752 million, saying it experienced consistent weekly sales momentum throughout the period. Consumers chose to dine in more often even as it retained 50% of the off-premise incremental volume it achieved when all of its dining rooms were closed.

That led it to notch a net loss of $17.6 million, which is $0.20 per share, or $0.12 per share on an adjusted basis -- far better than the $0.32 per-share loss analysts thought it would post.

Now what

The stock has more than tripled off the lows it hit back in March, so having come so far so fast, even with a better-than-expected earnings report, may have investors taking profits.

Restaurants generally benefited from the warm summer and autumn weather, and now that we're heading into the winter months with indoor seating capacities limited and states mulling new shutdowns, the market may think this is as good as it gets.

10 stocks we like better than Bloomin' Brands
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Bloomin' Brands wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of October 20, 2020

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

In This Story


Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More