Factors Setting the Tone for Brinker's (EAT) Q2 Earnings
Brinker International, Inc. EAT is scheduled to report second-quarter fiscal 2024 results on Jan 31. In the last reported quarter, the company delivered an earnings surprise of 833.3%.
How Are Estimates Placed?
The Zacks Consensus Estimate for fiscal second-quarter earnings per share (EPS) is pegged at 96 cents, indicating an improvement of 26.3% from 76 cents reported in the year-ago quarter.
The consensus mark for revenues is pegged at $1.08 billion, suggesting a 5.9% increase from the year-ago quarter’s figure.
Brinker International, Inc. Price and EPS Surprise
Brinker International, Inc. price-eps-surprise | Brinker International, Inc. Quote
Let's look at how things have shaped up in the quarter.
Factors at Play
Brinker‘s fiscal second-quarter top line is expected to increase year over year, courtesy of solid Chili's performance, improved value propositions and advertising campaigns. This and traffic improvements, new restaurant development, menu innovation and pricing adjustments are likely to have driven the company’s performance in the to-be-reported quarter.
For the said quarter, our model predicts revenues from Chili's and Maggiano's to increase 4.7% and 4.1% year over year to $919.7 million and $146 million, respectively.
Increased expenses in broad-based advertising and incremental repair and maintenance investments are likely to have hurt margins in the fiscal second quarter. The company anticipates general and administrative expenses to hold steady or slightly exceed the $42 million mark (reported in the fiscal first quarter), owing to elevated incentive compensation linked to improved operational performance.
Our model predicts fiscal second-quarter company restaurant expenses to be $922.4 million, up 3.4% year over year. Per the model, restaurant labor expenses are expected to increase 7.7% year over year to $360.5 million.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Brinker this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. But that's not the case here.
Earnings ESP: Brinker has an Earnings ESP of -5.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks Poised to Beat Earnings Estimates
Here are some stocks from the Zacks Retail-Wholesale sector that investors may consider, as our model shows that these also have the right combination of elements to post an earnings beat:
Chipotle Mexican Grill, Inc. CMG has an Earnings ESP of +1.61% and a Zacks Rank of 2.
CMG’s earnings for the quarter under review are expected to increase 17%. It reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining one occasion, the average surprise being 5.8%.
McDonald's Corporation MCD has an Earnings ESP of +0.71% and a Zacks Rank of 2.
MCD is expected to register 8.5% growth in earnings for the quarter to be reported. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 10%.
Papa John's International, Inc. PZZA has an Earnings ESP of +0.04% and a Zacks Rank of 3.
PZZA’s earnings for the to-be-reported quarter are expected to rise 2.8%. It reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining one occasion, the average surprise being 1.7%.
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McDonald's Corporation (MCD) : Free Stock Analysis Report
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
Brinker International, Inc. (EAT) : Free Stock Analysis Report
Papa John's International, Inc. (PZZA) : Free Stock Analysis Report
