On Wednesday, BMO (TSX:BMO) Capital Markets adjusted its outlook on Brinker International (NYSE:EAT), the parent company of Chili's and other restaurants, by raising its stock price target to $65.00 from the previous $55.00. The firm maintained its Outperform rating on the stock.
Brinker International reported a third-quarter fiscal year 2024 earnings per share (EPS) of $1.24, surpassing the consensus forecast by $0.09. This beat was attributed to stronger restaurant margins. The company's performance was bolstered by Chili's, which demonstrated positive customer traffic for the second quarter in a row, outpacing broader industry trends.
The company has revised its full-year fiscal 2024 EPS guidance upwards to a range of $3.80 to $4.00, a notable increase from the prior forecast of $3.45 to $3.70. This updated guidance reflects the company's confidence in maintaining its current momentum, with a particularly strong start noted for April.
The analyst from BMO Capital Markets expressed a positive outlook on Brinker International's strategic direction, citing gains in traffic share and margin expansion as key drivers of the company's ongoing turnaround. In light of these factors, the analyst has raised earnings estimates and the price target for the company's stock.
InvestingPro Insights
Brinker International's (NYSE:EAT) recent performance and upwardly revised earnings guidance are complemented by encouraging metrics and insights from InvestingPro. With a market capitalization of $2.37 billion and a P/E ratio that stands at 15.55, the company's valuation appears reasonable relative to near-term earnings growth, as indicated by the adjusted P/E ratio for the last twelve months as of Q2 2024, which is 13.25.
InvestingPro Tips highlight that analysts are optimistic about Brinker International's prospects, having revised their earnings upwards for the upcoming period. The company's stock has experienced significant returns over the last three months, with a total price return of 16.45%, and it is trading near its 52-week high, which is at 98.12% of the peak price. This suggests a strong market confidence in the company's trajectory.
Still, potential investors should be aware of certain risks, as the company's short-term obligations exceed its liquid assets, and it does not pay a dividend to shareholders. Moreover, the stock has shown volatility, with a substantial price uptick over the last six months, indicating a 55.45% return in that period.
For a more comprehensive analysis and additional InvestingPro Tips, including the latest on Brinker International's stock performance and financial health, visit https://www.investing.com/pro/EAT. Readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, where there are 13 additional tips available to guide your investment decisions.
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