Brinker International Reports Double-Digit Earnings Growth for 3Q15 (Part 5 of 5)
Brinker International declines
Brinker International (EAT) reported its 3Q15 earnings before the market opened on April 21. Shares started trading at $57.64, a decline of 2.3% from the previous day’s close of $59.02. The day’s high and low were $58.62 and $56.68, respectively.
Share volume was ~3.8 million shares compared to the 90-day average daily volume of ~1.8 million shares. According to NASDAQ, Brinker International closed at $56.84, or 3.7%, down from the previous day’s close of $59.02.
Despite the EPS (earnings per share) increase, investors don’t seem impressed with the low single-digit same-store sales growth and almost no unit growth, which are key revenue drivers.
Yum! Brands (YUM), which reported on the same day, saw its stock increase by 3%. Chipotle Mexican Grill (CMG) saw its share price decline by 6%. YUM and CMG make up 1.5% and 1%, respectively, of the Consumer Discretionary Select Sector SPDR Fund (XLY). XLY also has a 3% portfolio interest in Starbucks (SBUX).
Upgrades and downgrades
On April 22, Sanford C. Bernstein & Co. maintained its market perform rating on Brinker International with a price target of $63, which was raised from the previous target of $60.
On the same day, RBC Capital Markets also maintained its sector perform rating with a price target of $65.
As of April 22, nine analysts had a buy rating, ten had a hold rating, and one had a sell rating on Brinker International with a consensus target price of $65.
3Q15 estimates
Wall Street analysts’ consensus estimates for Brinker International in 3Q15 are as follows:
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Adjusted EPS is estimated at $0 . 94.
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Revenues are estimated at $791 million.
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Operating profits are estimated at $94 million, giving an operating margin of 11.8%.
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Adjusted net income is estimated at $60 million.
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3Q15 earnings are expected to be announced on August 6, 2015.
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