Shareholders might have noticed that Brinker International, Inc. (NYSE:EAT) filed its first-quarter result this time last week. The early response was not positive, with shares down 2.7% to US$43.54 in the past week. It looks like a credible result overall - although revenues of US$740m were what the analysts expected, Brinker International surprised by delivering a statutory profit of US$0.23 per share, instead of the previously forecast loss. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, Brinker International's 20 analysts are now forecasting revenues of US$3.36b in 2021. This would be a meaningful 11% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to bounce 453% to US$2.79. In the lead-up to this report, the analysts had been modelling revenues of US$3.33b and earnings per share (EPS) of US$2.27 in 2021. Although the revenue estimates have not really changed, we can see there's been a considerable lift to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target rose 6.5% to US$52.15, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Brinker International analyst has a price target of US$65.00 per share, while the most pessimistic values it at US$37.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Brinker International's past performance and to peers in the same industry. The analysts are definitely expecting Brinker International's growth to accelerate, with the forecast 11% growth ranking favourably alongside historical growth of 0.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 22% next year. So it's clear that despite the acceleration in growth, Brinker International is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Brinker International following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Brinker International. Long-term earnings power is much more important than next year's profits. We have forecasts for Brinker International going out to 2023, and you can see them free on our platform here.
Even so, be aware that Brinker International is showing 6 warning signs in our investment analysis , and 1 of those is potentially serious...
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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