Brinker Stock Sinks as Higher Costs Eat Into Earnings

Signage for a Chili's restaurant, which is owned by Brinker International — (Image credit: Callaghan O'Hare/Bloomberg via Getty Images)

Brinker International (EAT) stock is down nearly 13% Wednesday afternoon. The selloff comes after the parent company of Chili's and Maggiano's Little Italy came up short of earnings expectations for its fiscal fourth quarter and issued a weak earnings outlook for its new fiscal year.

In the thirteen weeks ended June 26, Brinker's revenue increased 12.3% year-over-year to $1.2 billion, driven by same-restaurant sales rising 13.5%. Comparable sales at Chili's were up an impressive 14.8%. The company also said its earnings per share (EPS) rose 15.8% from the year-ago period to $1.61 and that operating expenses were up 11.7% to $1.14 billion.

"We achieved another quarter of solid progress against our strategy to deliver profitable, sustainable growth," said Brinker CEO Kevin Hochman in a statement. "We significantly outperformed the industry in both sales and traffic during the quarter, while maintaining record high guest metrics."

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The results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $1.16 billion and earnings of $1.72 per share, according to Yahoo Finance.

Sentiment worsened toward Brinker after the company provided its outlook for fiscal 2025. Brinker anticipates EPS to arrive between $4.35 to $4.75. The midpoint of this range, $4.55, is well short of the consensus analyst estimate of $4.78.

On a positive note, Brinker anticipates revenue in the range of $4.55 billion to $4.62 billion in fiscal 2025, which is ahead of the $4.53 billion in revenue analysts are anticipating.

Is Brinker stock a buy, sell or hold?

Heading into today's trading, Brinker was up an impressive 63% for the year to date. Yet, Wall Street is on the sidelines when it comes to the consumer discretionary stock.

According to S&P Global Market Intelligence, the average analyst target price for EAT stock is $66.78, representing implied upside of more than 8% to current levels. Meanwhile, the consensus recommendation is Hold.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.