Brinker International (EAT) Stock Soars After Strong Q1 Earnings Beat
Brinker International, Inc. (NYSE: EAT), the parent company of popular restaurant chains like Chili’s and Maggiano’s Little Italy, is celebrating a strong start to its fiscal year. The company reported impressive first-quarter 2025 results, exceeding analysts’ expectations for both revenue and earnings, sending its stock price soaring.
Total revenue for the quarter jumped 12.5% year-on-year to reach $1.14 billion, comfortably surpassing the analyst consensus estimate of $1.10 billion. Adjusted earnings per share (EPS) also came in above expectations, clocking in at 95 cents compared to the analyst consensus of 69 cents.
The stellar performance was driven by strong comparable restaurant sales across the board. Chili’s saw a 14.1% increase in comparable restaurant sales, primarily attributed to increased menu pricing and higher traffic. The launch of the highly anticipated ‘Big Smasher’ burger and a successful advertising campaign played a significant role in driving customer traffic during the quarter. Maggiano’s also contributed to the positive results with a 4.2% increase in comparable restaurant sales.
Brinker’s strong performance extended beyond revenue growth. The company’s adjusted operating margin expanded by a significant 310 basis points to 13.5%, while adjusted operating income for the quarter surged by 45.4% to $151.7 million. This impressive growth was fueled by the company’s higher sales. Adjusted EBITDA for the quarter grew 54.1% year-over-year, reaching $111.6 million. As of September 25, Brinker held a robust $16.2 million in cash and equivalents. Net cash provided by operating activities for the quarter amounted to $62.8 million, demonstrating the company’s strong financial position.
“Great food, with great service at industry-leading value is driving strong Chili’s sales and traffic,” stated Kevin Hochman, President, and CEO of Brinker International. This sentiment highlights the company’s focus on providing a compelling customer experience that is resonating with diners.
Positive Outlook and Future Expectations
Brinker’s positive first-quarter performance has fueled optimism for the remainder of the fiscal year. The company expects adjusted EPS for fiscal 2025 to fall within the range of $5.20 to $5.50, a significant increase from its previous guidance of $4.35 to $4.75. This optimistic outlook also surpasses the analyst consensus estimate of $4.78.
In terms of revenue, Brinker anticipates fiscal 2025 revenue to be between $4.70 billion and $4.75 billion, exceeding its previous forecast of $4.55 billion to $4.62 billion. This projection also surpasses the analyst consensus estimate of $4.53 billion.
Market Reaction
The positive earnings report has had a significant impact on EAT stock. The stock surged 131% year-to-date before the earnings release. Following the announcement, EAT stock experienced a further premarket jump of 6.07%, reaching $102.90 at the time of this writing.
While Brinker’s strong performance has fueled enthusiasm among investors, it’s important to note that some analysts remain cautious. At least two Wall Street firms, including Argus Research and Raymond James, downgraded their stock ratings in October.
Despite these cautious voices, the overall market sentiment surrounding Brinker International remains positive. The company’s strong first-quarter results, coupled with its optimistic outlook, suggest a promising future for this leading restaurant chain.
