Brinker International's (NYSE:EAT) Q1 Earnings Results: Revenue In Line With Expectations, Full Year Guide Raised

Max Juang /
2024/04/30 6:51 am EDT

Casual restaurant chain Brinker International (NYSE:EAT) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 3.4% year on year to $1.12 billion. The company's outlook for the full year was also close to analysts' estimates with revenue guided to $4.34 billion at the midpoint. Its non-GAAP profit of $1.24 per share was flat year on year.

Is now the time to buy Brinker International? Find out by accessing our full research report, it's free.

Brinker International (EAT) Q1 CY2024 Highlights:

  • Revenue: $1.12 billion vs analyst estimates of $1.12 billion (small miss)
  • EPS (non-GAAP): $1.24 vs analyst estimates of $1.15 (8% beat)
  • The company raised both its revenue and EPS guidance for the full year (revenue now slightly ahead of Consensus, EPS well ahead)
  • Gross Margin (GAAP): 15%, up from 14.2% in the same quarter last year
  • Free Cash Flow of $78.7 million, up 61.9% from the previous quarter
  • Same-Store Sales were up 3% year on year (in line)
  • Store Locations: 1,618 at quarter end, decreasing by 36 over the last 12 months
  • Market Capitalization: $2.20 billion

"Our strong third quarter results were driven by the continued progress on guest experience, team member experience, and traffic driving initiatives," said Kevin Hochman, Chief Executive Officer and President of Brinker International.

Founded by Norman Brinker in Dallas, Texas, Brinker International (NYSE:EAT) is a casual restaurant chain that operates under the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.

Sit-Down Dining

Sit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.

Sales Growth

Brinker International is one of the larger restaurant chains in the industry and benefits from a strong brand, giving it customer mindshare and influence over purchasing decisions.

As you can see below, the company's annualized revenue growth rate of 6% over the last five years was weak as its restaurant footprint remained unchanged, implying that growth was driven by more sales at existing, established dining locations.

Brinker International Total Revenue

This quarter, Brinker International's revenue grew 3.4% year on year to $1.12 billion, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 4% over the next 12 months, an acceleration from this quarter.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefitting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.

Same-Store Sales

A company's same-store sales growth shows the year-on-year change in sales for its restaurants that have been open for at least a year, give or take. This is a key performance indicator because it measures organic growth and demand.

Brinker International's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 6.2% year on year. Given its flat restaurant base over the same period, this performance stems from increased foot traffic or larger order sizes per customer at existing locations.

Brinker International Year On Year Same Store Sales Growth

In the latest quarter, Brinker International's same-store sales rose 3% year on year. By the company's standards, this growth was a meaningful deceleration from the 10.7% year-on-year increase it posted 12 months ago. We'll be watching Brinker International closely to see if it can reaccelerate growth.

Key Takeaways from Brinker International's Q1 Results

Despite in line same store sales and a slight miss on the revenue line, Brinker International beat analysts' gross margin and EPS expectations this quarter. We were also impressed that the company raised its full-year revenue and earnings guidance, both of which now exceeded Wall Street's estimates. Overall, we think this was a solid quarter that should satisfy shareholders. The stock is flat after reporting and currently trades at $49.9 per share.

Brinker International may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.