What happened:
Shares of casual restaurant chain Brinker International (NYSE:EAT) fell 16.4% in morning trading after the company reported second-quarter results. Brinker’s earnings per share missed expectations. Full-year earnings guidance also missed analysts’ expectations, suggesting expectations were high before the earnings release. On the other hand, revenue came in above consensus. For perspective, we think this was a mixed quarter, but the outlook weighs on shares.
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What does the market tell us:
Brinker International shares are very volatile, having seen 15 price swings of over 5% in the last year. But such large price swings are very rare even for Brinker International, and that suggests to us that this news has had a significant impact on the market’s perception of the company.
The biggest move we’ve covered in the last year came 4 months ago when the stock rose 8.5% after the company reported its first quarter results. Despite comparable-store sales and a slight miss on revenue guidance, Brinker International beat analysts’ expectations for gross margin and earnings per share. Looking ahead, the company raised its full-year revenue and earnings guidance, which now both beat Wall Street estimates. Overall, we believe this was a solid quarter that should please shareholders.
Brinker International is up 48.9% year-to-date, but at $62.66 per share, it is still trading 15.8% below its 52-week high of $74.44 set in June 2024. Investors who purchased $1,000 worth of Brinker International stock 5 years ago would be looking at an investment worth $1,693 today.
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