Brinker International (EAT) shares fell nearly 13% on Wednesday afternoon. The sell-off came after the parent company of Chili’s and Maggiano’s Little Italy missed earnings expectations for its fiscal fourth quarter and issued a weak earnings outlook for the new fiscal year.
For the thirteen weeks ended June 26, Brinker’s revenue increased 12.3% year over year to $1.2 billion, driven by a 13.5% increase in comparable restaurant sales. Comparable sales at Chili’s increased an impressive 14.8%. The company also announced that its earnings per share (EPS) increased 15.8% year over year to $1.61 and that operating expenses increased 11.7% to $1.14 billion.
“We delivered another quarter of solid progress on our strategy to deliver profitable, sustainable growth,” Brinker CEO Kevin Hochman said in a statement. “We significantly outperformed the industry in both revenue and traffic this quarter, while also delivering record guest numbers.”
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The results were mixed compared to analysts’ expectations. According to Yahoo Finance, Wall Street had expected revenue of $1.16 billion and earnings of $1.72 per share.
Sentiment toward Brinker worsened after the company announced its outlook for fiscal 2025. Brinker expects earnings per share between $4.35 and $4.75. The midpoint of that range, $4.55, is well below the analyst consensus estimate of $4.78.
On a positive note, Brinker expects revenue in the range of $4.55 billion to $4.62 billion for fiscal year 2025, above the $4.53 billion expected by analysts.
Should I buy, sell or keep Brinker shares?
Before today’s trading, Brinker posted an impressive 63% gain year to date. Nevertheless, Wall Street remains cautious about the consumer goods stock.
Accordingly S&P Global Market IntelligenceThe average analyst price target for EAT shares is $66.78, implying an upside of more than 8% from current levels. The consensus recommendation, meanwhile, is Hold.
