Brinker Stock Before Q3 Earnings: Buy Now or Wait for Results?

Brinker International, Inc. EAT is scheduled to release third-quarter fiscal 2025 results on April 29. In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 55.6%.

EAT’s Q3 Estimate Revisions

The Zacks Consensus Estimate for Brinker’s third-quarter fiscal 2025 earnings per share is pegged at $2.48, suggesting a 100% year-over-year upsurge. The consensus mark has witnessed a upward revision of 1% in the past 30 days. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The consensus estimate for revenues is pegged at $1.36 billion, indicating a 21.7% rise from the year-ago quarter's reported figure.

Brinker’s Earnings Surprise History

EAT has beaten the consensus mark in the trailing three of the trailing four quarters and missed once, the average surprise being 24.7%, as shown in the chart below.

Q3 Earnings Whispers

Our proven model predicts an earnings beat for Brinker’s this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Brinker’s has an Earnings ESP of +0.27%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Influence EAT’s Q3 Performance

The company’s performance in the quarter is likely to have been aided by an increase in traffic, thanks to sales-building initiatives, such as streamlining the menu and its innovation, strengthening its value proposition and better food presentation. Advertising campaigns, kitchen system optimization, and the introduction of a better service platform are also likely to have aided the top line. The company’s expansion efforts bode well.

Brinker’s digitalization initiatives, including improved order management systems, are expected to have streamlined operations and enhanced customer experience in the fiscal third quarter. This and the emphasis on social media campaigns targeting younger demographics are anticipated to have contributed to guest check and comps growth in the to-be-reported quarter. Our model predicts fiscal third-quarter comps to rise 23% year over year.

Our model predicts Chili’s revenues to grow 21.7% year over year to $1.21 billion, while Maggiano’s revenues are estimated to increase 3.8% to $125.3 million. The combined impact of pricing strategies, menu innovation and operational upgrades is anticipated to have strengthened EAT’s fiscal third-quarter revenue base.

However, uncertainties regarding the consumer environment in the second half of fiscal 2025 are expected to have hurt the company’s performance. Any deterioration in discretionary spending due to inflation, economic uncertainty, or shifts in dining preferences is likely to have negatively impacted the company’s performance. The rise in labor costs, including wage rates, has been concerning. Our model predicts total restaurant costs to increase 15.4% year over year.

Brinker Stock’s Price Performance & Valuation

EAT shares have gained 222.1% in the past year compared with the industry’s rise of 0.4%. EAT has outpaced other industry players like BJ's Restaurants, Inc. BJRI, Shake Shack Inc. SHAK and Chipotle Mexican Grill, Inc. CMG.

EAT Price Performance

Despite the company’s shares witnessing exceptional gain in the past year, it is still trading at a discount. Brinker stock’s forward 12-month P/E ratio stands at 17.25X, lower than the industry. The stock is also trading at a discount compared with other industry players like BJ's Restaurants, Shake Shack and Chipotle.

Brinker’s P/E Ratio (Forward 12 Months)

Investment Thoughts on EAT

Brinker’s impressive stock rally over the past year reflects growing investor optimism, driven by strong earnings momentum, solid revenue growth and successful brand initiatives like menu innovation, digital upgrades and operational improvements. While the company is benefiting from strategic efforts, which are boosting traffic and guest engagement, uncertainties around consumer spending, inflation and rising labor costs may pose challenges ahead.

Given this backdrop, investors already holding the stock in their portfolios may benefit from staying invested to capture long-term upside, but new investors should wait for clearer signals post earnings before initiating fresh positions.

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This article originally published on Zacks Investment Research (zacks.com).

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