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Brinker International (EAT) |
HenryTo
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Location: Los Angeles, California
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 Posted: Fri Mar 26, 2010 12:18 pm Post subject: Brinker International (EAT) |
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Morningstar on EAT's sale of On the Border to Golden Gate Capital:
| Quote: | | Brinker International EAT announced plans to sell the 160-unit On the Border chain to Golden Gate Capital by the end of June 2010, and provided an update on fiscal 2010 guidance that was better-than-expected. After incorporating these changes into our valuation, we are planning to maintain our fair value estimate. At first glance, the sale of the On the Border chain to Golden Gate Capital will have a minimal impact on our valuation, given that the size of the transaction is relatively small. In fiscal 2009, On the Border generated $357 million in revenue, which accounted for only about 10% of Brinker's overall sales. While the firm does not provide an operating margin breakdown by segment, we suspect that the On the Border chain is slightly less profitable compare d to its more heavily franchised flagship chain, Chili's Grill and Bar, based on lower unit productivity. Therefore, we estimate that the reduction in revenue from this segment will be partially offset by an improvement in the company's operating margins. The firm expects to record a gain on this transaction, but specific details have yet to be disclosed. We anticipate that more information will be available during the conference call today. In line with our expectations that guest traffic is improving in the casual dining space as discretionary spending improves, Brinker provided a more optimistic outlook for fiscal 2010. Additionally, we believe Brinker's decision to launch new menu items and discontinue the 3 for $20 promotion has helped improve margins during the third quarter. The firm now expects full year earnings to be between $1.40 and $1.44 per share, compared to the $1.15 to $1.30 earnings per share forecasted previously. Following these announcements, Brinker also raised its quarterly dividend by 27% to $0.14 per share, and increased its share repurchase availability to $310 million. |
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Brinker International (EAT) Replies |
HenryTo
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Joined: 06 Aug 2004
Posts: 11723
Location: Los Angeles, California
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| Posted: Wed Oct 26, 2011 2:23 pm Post subject: |
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Morningstar on EAT's fiscal 1Q earnings:
| Quote: | | Brinker International EAT again posted solid financial results in its first fiscal quarter, reflecting continued strong comparable-store sales and operating margin expansion. Total sales were up 2.1% year over year to $668 million, primarily due to increased traffic at the firm's two concepts, Chili's and Maggiano's. Consistent with our assumptions, the firm expects fiscal 2012 revenue to be up 2%-3% and operating margins to expand 50 basis points, leading to earnings per share of $1.80-$1.95. We believe the shares are currently modestly overvalued, and we remain concerned that a correction among restaurant stocks may occur as macroeconomic pressures and menu price increases from earlier in the year weigh on traffic industrywide. Chili's comparable-store sales increased 1.7% entirely due to a 1.9% rise in traffic, partially offset by a mix shift toward lower-priced items. Maggiano's comparable-store sales were up 3.5% due to a 2.1% increase in traffic and higher prices. Despite higher input costs, margins continue to expand, with the overall restaurant margin up 80 basis points to 15.8%. We attribute this success to pricing improvements, labor cost reductions, efficiency gains related to technology updates and the transformation of kitchen processes, and fixed-cost sales leveraging. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11723
Location: Los Angeles, California
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| Posted: Thu Aug 11, 2011 11:25 pm Post subject: |
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Morningstar on EAT's fiscal 4Q earnings:
| Quote: | | Brinker International EAT presented solid fourth-quarter results reflecting continued strong comparable-store sales and solid operating margins. The margin expansion exceeded our already optimistic assumptions, and we plan to raise our fair value estimate modestly to account for this, along with management's robust outlook for the coming year. For fiscal 2012, the firm expects revenue to be up 2%-3% and operating margins to expand 50 basis points, leading to earnings per share of $1.80-$1.95. With operating margin expansion and the reduction in shares from share-repurchase activity, we believe this EPS target is attainable and will adjust our model accordingly. We believe the shares are currently fairly valued. Despite intense competition in the casual dining industry, Brinker's total fourth-quarter sales were up 3.8% to $717.5 million (excluding the impact of an extra week in the fourth quarter of 2010) on strong comparable-store sales growth. The operating margin was flat at 8.9% despite our expectation that higher beef prices would hit the firm this quarter. We attribute this success to pricing improvements, labor cost reductions, and efficiency gains related to technology updates and the transformation of kitchen processes. By concept, Chili's comparable-restaurant sales were up 2.1%, as traffic trends have turned positive for the brand. Maggiano's continued to perform well with a 5.7% increase in comparable-restaurant sales, thanks to robust customer traffic. |
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