What Happened:
Shares of casual restaurant chain Brinker International (NYSE:EAT) fell 16.4% in the morning session after the company reported second-quarter earnings results. Brinker's EPS missed. Its full-year earnings forecast missed analysts' expectations as well, suggesting expectations were high heading ahead of earnings. On the other hand, revenue came in ahead of consensus. Zooming out, we think this was a mixed quarter, but the outlook is weighing on shares.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Brinker International? Access our full analysis report here, it’s free.
What is the market telling us:
Brinker International's shares are very volatile and over the last year have had 15 moves greater than 5%. But moves this big are very rare even for Brinker International and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The biggest move we wrote about over the last year was 4 months ago, when the stock gained 8.5% on the news that the company reported first quarter results. Despite in line same store sales and a slight miss on the revenue line, Brinker International beat analysts' gross margin and EPS expectations. Looking ahead, 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.
Brinker International is up 48.9% since the beginning of the year, but at $62.66 per share it is still trading 15.8% below its 52-week high of $74.44 from June 2024. Investors who bought $1,000 worth of Brinker International's shares 5 years ago would now be looking at an investment worth $1,693.
When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.