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On Thursday, Raymond (NSE:RYMD) James analyst Brian Vaccaro maintained a Market Perform rating on shares of Brinker International (NYSE:EAT), following investor meetings in New York City with the company’s top management. The discussions provided insights into the current business trajectory of Brinker’s Chili’s brand, including its recent product launches and future growth strategies. The company has shown remarkable momentum, with InvestingPro data showing a 141% return over the past year and strong revenue growth of 19.8% in the latest quarter.
During the meetings, CEO Kevin Hochman, CFO Mika Ware, and VP of Investor and Government Relations Kim Sanders outlined a positive outlook for Chili’s, particularly highlighting the success of new menu items like the Big QP. This optimism aligns with third-party traffic data, which suggests a strong potential for Chili’s to surpass consensus expectations for its fourth fiscal quarter comparable sales. According to InvestingPro, 16 analysts have revised their earnings upwards for the upcoming period, supporting management’s positive outlook. The company’s market capitalization now stands at $7.49 billion, reflecting strong investor confidence.
Vaccaro also noted Brinker’s strategic plans, which encompass menu innovation, remodeling efforts, expansion through new units, and a significant share repurchase program set to commence in fiscal year 2026. While expressing a bullish stance on Chili’s brand revitalization and its prospects for driving sales into FY26, Vaccaro indicated that the near-term risk/reward balance appears neutral. He pointed out that while there may be upside potential in the fourth fiscal quarter, this could be offset by an expected moderation in the second fiscal quarter of 2025.
Brinker’s valuation was also discussed, with the analyst mentioning a forward price-to-earnings ratio of approximately 16 times for FY26. This valuation is considered fair by Raymond James, especially considering their earnings estimate of $10.45, which stands above the consensus of $9.79. The meetings provided a comprehensive view of the company’s operational direction and financial planning as it continues to navigate the competitive restaurant industry landscape.
In other recent news, Brinker International, Inc. reported strong financial results for the first quarter of 2025, surpassing both earnings and revenue forecasts. The company posted an earnings per share of $2.66, exceeding the forecast of $2.49, and achieved a revenue of $1.43 billion, surpassing expectations by $60 million. S&P Global Ratings recently upgraded Brinker’s credit rating to ’BB+’ from ’BB-’, citing the company’s strong operating performance and successful debt reduction. The company’s adjusted debt to EBITDA ratio was lowered to 2.0x for the 12 months ended March 26, 2025, a significant improvement from the previous year. Brinker International also announced the promotion of Aaron White to the roles of Executive Vice President, Chief Operating Officer, and Chief People Officer. White’s leadership is expected to enhance operational efficiency and improve the dining experience. Despite these positive developments, Brinker’s stock experienced a decline, which may reflect broader market concerns or challenges in sustaining growth. The company continues to focus on operational improvements and product innovations, aiming for further growth in the future.
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