Brinker International Stock Looks Tasty Trading at a Discount

• Brinker International (EAT) demonstrates strong technical momentum, with a 40% gain over the past year.
• EAT trades at a trailing P/E of 22.18x, with revenue and earnings expected to grow 7.82% and 20.92% this year, respectively.
• Analyst sentiment is predominantly bullish, though valuation concerns persist.
• Despite valuation debates, EAT’s growth compares favorably to peers trading at higher multiples, supporting continued optimism.

Today’s Featured Stock

Valued at $9.69 billion, Brinker International (EAT) primarily owns, operates, develops, and franchises various restaurants under Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) brands. 

What I’m Watching

I found today’s Chart of the Day by using Barchart’s powerful screening functions to sort for stocks with the highest technical buy signals and superior current momentum. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. EAT checks those boxes. The Trend Seeker issued a new “Buy” signal on June 11. Since then, the stock has gained 41.52%.

Barchart’s Technical Indicators for Brinker International

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

Brinker International scored an all-time high of $229.12 on August 6.

• Brinker has a Weighted Alpha of 74.07.
• EAT has a 100% “Buy” opinion from Barchart.
• The stock has gained 41.49% over the past 52 weeks.
• Brinker has its Trend Seeker “Buy” signal intact.
• The stock recently traded at $225.64 with a 50-day moving average of $176.35.
• EAT has made 15 new highs and gained 28.72% over the past month.
• 60-month beta of 1.24.
• Relative Strength Index (RSI) is at 73.33.
• There’s a technical support level around $221.52.

Don’t Forget the Fundamentals

• $9.69 billion market capitalization.
• 22.18x trailing price/earnings ratio
• Revenue is predicted to grow 7.82% this year and another 5.75% next year.
• Earnings are estimated to increase by 20.92% this year and an additional 16.04% next year.

Analyst and Investor Sentiment on Brinker International

• The Wall Street analysts followed by Barchart give the stock 15 “Strong Buy,” 2 “Moderate Buy,” and 6 “Hold” opinions with price targets between $160 and $230.
• Value Line rates the stock “Highest” with price targets between $180 and $270.
• CFRA’s MarketScope rates the stock a “Buy.”
• Morningstar thinks the stock is 62% overvalued with a fair value of $139.
• 27,970 investors are following the stock on Seeking Alpha, which rates it a “Buy” and along with Morningstar has a problem with its valuation
• Short interest is 13.37% of the float with 5.53 days to cover the float.

The Bottom Line on Brinker International

Brinker has enjoyed years of increases in revenue, earnings, and cash flow from operations and most analysts think that will continue in the future. I do realize that there are those who are concerned about the high valuation and the short interest above 13%. When I compare it to Cava (CAVA) at 127x trailing earnings and Shake Shack (SHAK) at 78x trailing earnings, I’m not that concerned.

Additional disclosure: The Barchart Chart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance.