Shares of Brinker International, Inc. EAT have skyrocketed 289.7% in the past year, outperforming the broader market and industry peers. In the trailing 12 months, the Zacks Retail - Restaurants industry has gained 4.3%, while the Zacks Retail-Wholesale sector and the S&P 500 have returned 32.6% and 25.3%, respectively.
The company's focus on strategic menu innovation, customer-centric promotions and operational efficiency improvements has been instrumental in driving this momentum. Additionally, favorable consumer trends and improved traffic trends have strengthened investor confidence.
One-Year EAT Stock Price Performance
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Momentum Carries Into January 2025
Brinker’s stock has demonstrated a strong upward trend in January 2025, reflecting bullish investor sentiment. The stock opened the year at $133.48 on Jan. 2 and surged to $152.61 by Jan. 22, marking an impressive rise of approximately 14.3% in three weeks. On Jan. 22, the stock reached a new 52-week high of $155.13, indicating a strong bullish sentiment surrounding Brinker. Trading volumes also paint a bullish picture, with 1.38 million shares traded on Jan 22, coinciding with the month’s highest closing price.
The stock has exhibited limited pullbacks, with most days closing above their respective opening prices. The steady price increase, coupled with rising volumes, suggests strong demand and positive sentiment toward the stock, positioning it for potential further gains.
This impressive run has sparked interest among investors, especially as EAT pulls ahead of industry players like Chipotle Mexican Grill, Inc. CMG, Dutch Bros Inc. BROS and Yum! Brands, Inc. YUM. With Brinker firing on all cylinders, investors now face a critical decision: jump in at current levels or wait for a potential pullback.
Factors Driving EAT’s Rally
Brinker’s barbell pricing strategy for margaritas has been instrumental in driving revenue and margin growth by offering options across a wide price range. The super-premium Don Julio margarita, priced above $10, has successfully appealed to customers seeking high-quality beverages. At the same time, the $6 Margarita of the Month, such as October's "Witches Brew," has achieved record-breaking sales, attracting value-conscious consumers. This strategic balance between value and premium offerings has proven effective in catering to diverse customer preferences while maintaining profitability.
The company has utilized social media to enhance brand engagement and foot traffic. Campaigns promoting the Triple Dipper have boosted awareness and sales, with the recent addition of Nashville Hot Mozzarella Sticks further increasing its appeal. The popularity of the Triple Dipper reflects customers' preference for variety and customization, paving the path for incremental sales.
Chili’s has streamlined its menu with the “five to drive” strategy, focusing on core items: burgers, crispers, fajitas, margaritas and the Triple Dipper. The Triple Dipper, in particular, has resonated strongly with younger customers seeking variety. The company is optimistic and anticipates product expansion to sustain traffic growth and boost average check sizes in the upcoming periods.
The value-focused 3 for Me bundle has also delivered strong results, attracting both cost-conscious and higher-spending customers. Combined with tiered pricing, these initiatives have bolstered profitability and highlighted Chili’s ability to balance competitive pricing with quality, enhancing its appeal among consumers.
What Lies Next for Brinker?
Brinker is leveraging insights from Chili’s success to rejuvenate the Maggiano’s brand. Key initiatives include simplifying the menu, introducing new signature dishes, and offering innovative cocktails like the smoking-box Old Fashioned. The company is also streamlining operations by eliminating unprofitable items, such as the $6 take-home pasta, to enhance the overall guest experience.
Brinker’s strategic efforts position the company for sustained growth. Although inflationary pressures on food and labor costs present challenges, its emphasis on operational efficiency and a strong pricing strategy are expected to mitigate margin risks. Additionally, ongoing investments in data analytics to personalize marketing and continuous menu innovation provide further opportunities for expansion and profitability.
Earnings Estimate Revision Favors EAT
Analysts are increasingly bullish on EAT’s prospects. Earnings estimates for the company have been going up over the past 60 days. The Zacks Consensus Estimate for fiscal 2025 has increased by 8% in the said time frame. The consensus estimate for fiscal 2026 has also been revised 10.9% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Image Source: Zacks Investment Research
EAT Returns Higher Than the Industry
Brinker’s return on invested capital (ROIC) has outperformed the industry average in the trailing 12 months. ROIC of EAT was 14.46% compared with the industry average of 10.18%.
Image Source: Zacks Investment Research
The company’s impressive ROIC is a testament to its effective capital allocation, strategic market positioning and operational efficiency. The company’s focus on delivering value-driven guest experiences, menu innovation, and targeted marketing has resulted in strong sales growth and significant margin improvements. These efforts, combined with sustainable investments in technology and restaurant development, position Brinker to continue delivering superior returns on invested capital.
EAT’s Technical and Valuation Insights
Technical indicators suggest continued strong performance for EAT. As of Wednesday, Brinker stock was trading above its 50-day moving average of $131.20 and its 200-day moving average of $85.10. The technical strength underscores positive market sentiment and confidence in EAT’s financial health and prospects.
EAT Stock Trades Above 50 and 200-Day Moving Average
Image Source: Zacks Investment Research
With a forward 12-month price-to-earnings of 23.70X, below the industry average of 25.37X, the stock presents a potentially attractive valuation for investors.
Image Source: Zacks Investment Research
Is EAT Still Worth Buying?
Brinker’s exceptional performance, fueled by robust operational strategy, innovative menu offerings, and effective pricing tactics, positions the stock as a compelling investment opportunity. Strong consumer engagement, coupled with sustained sales growth and margin improvements, has demonstrated an ability to capture market share and sustain growth.
The company’s impressive ROIC and favorable earnings estimate revisions further highlight its financial health and growth potential. Given its continued momentum and long-term growth strategies, we believe that this Zacks Rank #2 (Buy) stock is an ideal candidate for investors’ portfolio addition.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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