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Brinker (EAT) Stock Up on Q3 Earnings Beat & Upbeat Q4 View

Brinker International, Inc. EAT reported third-quarter fiscal 2021 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The bottom line beat the consensus estimate for the sixth straight quarter. Moreover, the metrics declined year over year. However, following the results, the company’s shares moved up 3.3% during the trading hours on Apr 29.

Earnings & Revenue Discussion

The company reported adjusted earnings per share of 78 cents, beating the Zacks Consensus Estimate of 77 cents. Notably, Brinker had reported adjusted earnings of $1.28 in the year-ago quarter.

Quarterly revenues of $828.4 million missed the consensus mark of $835.4 million. Also, the top line declined 3.7% on a year-over-year basis. Notably, the downside was primarily due to the pandemic affecting dining room sales.

Brinker International, Inc. Price, Consensus and EPS Surprise


Brinker International, Inc. price-consensus-eps-surprise-chart | Brinker International, Inc. Quote


Chili’s revenues in the fiscal third quarter fell 1.4% year over year to $763.0 million, primarily due to lower traffic, dismal dining room sales and the impact of Winter Storm Uri. However, this was partly offset by increase in off-premise sales, which includes It's Just Wings.

Chili's company restaurant expenses (as a percentage of company sales) in the fiscal third quarter contracted to 85.7% year over year from 86.6%. The decrease was primarily due to lower advertising expenses, drop in hourly labor expenses, and favorable menu item mix, partially offset by higher expenses related to delivery fees and supplies in connection with growth in off-premise sales and higher manager bonus expenses.

In third-quarter fiscal 2021, company-owned comps remained flat in comparison to the prior-year quarter.

Comps at Chili's franchised restaurants increased 0.2% compared with a dip of 7.7% in the year-ago quarter. At international franchised Chili’s restaurants, the same fell 8.8% compared with the year-ago quarter’s decrease of 9.5%. Meanwhile, at the U.S. franchised units, comps increased 5.2% compared with the year-ago quarter’s decline of 6.3%.

At Chili's, domestic comps (including company-owned and franchised) increased 0.6% against the prior-year quarter’s decrease of 5.4%.


Maggiano's sales slumped 30.2% year over year to $65.4 million primarily due to lower dining sales on account of COVID-19. However, this was partially mitigated by increased off-premise sales. Comps plunged 29.6% year over year.

Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal third quarter slightly narrowed to 91.2% compared with the prior-year quarter’s 91.9%. The decrease is mainly due to lower manager and hourly labor expenses, drop in repairs and maintenance expenses, contraction in variable rent expenses, favorable menu item mix, lower banquet expenses, drop in credit card fees, lower advertising expenses and reduced utilities expenses. However, these were partially negated by sales deleverage, higher expenses related to delivery fees and supplies in connection with growth in off-premise sales, higher manager bonus expenses and increased insurance expenses.

Operating Results

Total operating costs and expenses contracted to $776.2 million from $818.9 million in the year-ago quarter. Moreover, restaurant operating margin — as a percentage of company sales — was 14.3% compared with 13.4% in the prior-year quarter.

Balance Sheet

As of Mar 24, 2021, cash and cash equivalents amounted to $63.6 million compared with $167.2 million as on Mar 24, 2020.

Long-term debt was $1,017 million as of Mar 24, 2021, compared with $1,208.5 million on Jun 24, 2020. Total shareholders’ deficit in the reported quarter came in at ($390.6) million compared with ($479.1) million as of Jun 24, 2020.

Q4 Outlook

For the fourth quarter of fiscal 2021, the company expects revenues in the band of $950 million to $1.0 billion. Earnings per share, excluding special items, for fourth-quarter fiscal 2021 are projected in the range of $1.55 to $170. The Zacks Consensus Estimate for the same is pegged at $1.31. For the fourth quarter of fiscal 2021, the company expects diluted weighted average shares outstanding in the range of $47-$48 million.

Due to the uncertainties caused by the pandemic, the company anticipates operating results to slightly deviate from the projected range.

Zacks Rank & Key Picks

Brinker currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Zacks Retail - Restaurants industry include Darden Restaurants, Inc. DRI, Yum! Brands, Inc. YUM and Chuy's Holdings, Inc. CHUY. Darden sports a Zacks Rank #1 (Strong Buy), while Yum! Brands and Chuy's Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Darden’s fiscal 2021 earnings are expected to rise 26.5%.

Yum! Brands and Chuy's Holdings’ 2021 earnings are likely to increase 8.6% and 35.7%, respectively.

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