Week 10 Deep Dive #17
Today we’re going to be looking at Brinker International, ticker symbol EAT 0.00%↑. Brinker international is a leading casual dining restaurant company based in Dallas, Texas. Founded in 1975, it operates, owns, or franchises over 1,600 restaurants globally across 31 countries and two territories. The company's primary brands include, Chili's Grill & Bar, Maggiano's Little Italy, and It's Just Wings.
In 2024, EAT 0.00%↑ opened at $42.88 per share, and closed at $132.29 per share, a 208% gain, outperforming SPY 0.00%↑ by 183%.
Lets take a look at the charts
Daily:
Weekly:
EAT 0.00%↑ ‘s first earnings report for 2024 was on 1/31/2024, lets take a look.
PROS:
-High relative volume reaction (5.1 Million)
-51.6% increase in net income per diluted share
-5.2% increase in comparable restaurant sales
-Updates to full-year fiscal 2024 guidance
From opening price on earnings day till it’s next earnings, price netted a ~25.9% gain.
It’s next report was on 4/30/2024.
PROS:
-Company sales increased to $1.108.9 million in the third quarter of fiscal 2024
-Comparable restaurant sales saw a 3.3% increase, with Chili's at 3.5% and Maggiano's at 1.7%
-Net income per diluted share was $1.08 in the third quarter of fiscal 2024
-Operating income margin rose to 6.2% and restaurant operating margin to 14.2% for the quarter
CONS:
-The company reported a decline in overall traffic by 1.8%, attributed to a strategic decision to de-emphasize virtual brands
-Net income decreased to $48.7 million in the third quarter of fiscal 2024
-Operating income as a percentage of total revenues increased to 6.2%, compared to 5.9% in the previous year
Price ended up trending above the 5EMA and 10EMA for 1.2 months. One of the cleanest trending price reactions after an earnings announcement. This reminds me of NVDA 0.00%↑ 5/22/24 reaction, and PLTR 0.00%↑ 11/4/24.
Price then ended up pulling back 25.98% from highs heading into its next earnings report on 8/14/2024. Keep in mind that 25% pullback was during the July-August broad market pullback.
PROS:
-Company sales increased 12.4% year-over-year to $1.196.5 million
-Comparable restaurant sales grew 13.5%, with Chili's up 14.8%
-Strong cash position with $64.6 million on hand and no outstanding borrowings
CONS:
-Sold off on heavy volume (8.8 Million)
-Maggiano's comparable restaurant sales growth of 2.5% lagged behind Chili's performance
-Maggiano's operating income decreased by $2.6 million compared to the previous year
As Minervini says 25% pullback from highs is a sign of normal price action. So the pullback heading into earnings was not concerning. The stock gapping down 10% was odd to me, considering price quickly reclaimed all MA’s and trending above the 20SMA for 2.8 months, closing out 2024 strong.
Brinker’s final report for 2024 was on 10/30/2024.
PROS:
-Company sales increased 12.5% year-over-year to $1.127.3 million
-Comparable restaurant sales grew 13.0%, with Chili's up 14.1%
-Operating income margin improved to 5.0% from 2.4%
-Net income increased to $38.5 million from $7.2 million
CONS:
-Maggiano's showed slower growth with only 4.2% comparable sales increase
To conclude, EAT 0.00%↑ was one the cleanest trending stocks we’ve done so far. the period between 4/30/2024-6/7/2024, and 9/16/2024-12/9/2024 were great because price trended above all short term moving averages (The 5EMA, 10EMA, 20SMA).