Brinker (EAT) Stock Rises 27% in 3 months: What's Driving it?
Brinker International, Inc. EAT stock has performed well in the past three months. The stock has gained 27.1% compared with the industry’s growth of 2.1%. The company is benefiting from improved menu pricing and a favorable menu item mix. Sales-driving initiatives, expansion plans and digital enhancements also bode well.
This Zacks Rank #1 (Strong Buy) company’s earnings and revenues in fiscal 2024 are likely to witness growth of 26.2% and 5% year over year, respectively. In the past 30 days, its fiscal 2024 earnings have witnessed upward revisions of 0.9% to $3.57. Let’s delve deeper.
Growth Drivers
Brinker remains committed to boosting both foot traffic and revenues through a variety of initiatives aimed at enhancing sales. These include refining the menu and introducing innovative options, fortifying the value proposition, improving food presentation, implementing effective advertising campaigns, optimizing kitchen systems and introducing a more efficient service platform.
In third-quarter fiscal 2023, the company's 3 for Me TV campaign played a significant role in narrowing the traffic gap and boosting Chili's market share growth. Also, this marked its first national advertising window in more than three years. Following the strategy's success, the company now plans to expand it from 21 weeks to 25 weeks on TV during fiscal 2024.
The strategy will emphasize value and Core Four menu items. This approach will be complemented by offers, innovation, menu merchandising and digital strategy to increase brand awareness and drive revenues. It is also developing a more advanced CRM program to boost customer frequency.
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Brinker is one of the few fast-casual restaurant chains that have been expanding despite sluggish economic development. Management is gearing up for international expansion as well, especially in the faster-growing emerging markets. The company is on the lookout to expand the brand in existing markets and enter new ones. During first-quarter fiscal 2024, it opened three new Chili's restaurants, bringing Brinker's total openings to 1,651. These recent openings continue to strengthen Chili's brand, as three of them consecutively reported record new opening sales in this quarter.
Over the past few quarters, Brinker’s remodeling efforts have gained momentum. Notably, the company continues to invest in its reimage program. In fact, it continues to invest in a brand-wide reimage program that are likely to drive traffic and comps over the next three years. Brinker’s remodeling initiative is thus expected to continue to invigorate its potential as a brand and augment guests’ experience. Meanwhile, the company has initiated innovation efforts to upgrade its kitchen. It started testing new equipment that delivers better products efficiently and boost volumes.
The company is positioned to invest aggressively to grow its business in fiscal 2024 and beyond. For the coming year, Brinker’s will look for more ways to offer convenience, value and a great guest experience by doubling its pipeline of new restaurant openings and expanding its portfolio of brands.
Other Key Picks
Some other top-ranked stocks from the Zacks Retail-Wholesale sector are:
Arcos Dorados Holdings Inc. ARCO currently sports a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 28.3%, on average. The stock has gained 60% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ARCO’s 2023 sales and earnings per share (EPS) suggests a rise of 19.3% and 18.8%, respectively, from the year-ago period’s levels.
Abercrombie & Fitch Co. ANF flaunts a Zacks Rank #1 at present. It has a trailing four-quarter earnings surprise of 713%, on average. Shares of ANF have surged 259.8% in the past year.
The Zacks Consensus Estimate for ANF’s 2023 sales and EPS suggests increases of 12.8% and 2,088%, respectively, from the year-ago period’s levels.
Beacon Roofing Supply, Inc. BECN currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 11.1%, on average. Shares of BECN have gained 39.5% in the past year.
The Zacks Consensus Estimate for BECN’s 2023 sales and EPS indicates 7.2% and 8.2% growth, respectively, from the year-ago period’s levels.
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