Brinker International, Inc. EAT is scheduled to report second-quarter fiscal 2025 results on Jan. 29, 2025, before the opening bell.

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In the first quarter of fiscal 2025, EAT reported stellar performance, with earnings per share (EPS) beating the Zacks Consensus Estimate by 37.7% and revenues surpassing the same by 4.1%. Year over year, adjusted EPS and revenues rose 239.3% and 12.5%, respectively. Successful promotions regarding Triple Dipper drove significant engagement and sales in the quarter.

EAT has an impressive track record of surpassing earnings expectations, exceeding the consensus mark in three of the trailing four quarters. The average surprise over this period is 12.1%, as shown in the chart below.

EAT’s Earnings Surprise History

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Trend in EAT’s Estimate Revision

The Zacks Consensus Estimate for earnings for the fiscal second quarter is pegged at $1.69 per share, indicating an improvement of 70.7% from 99 cents reported in the year-ago quarter. The consensus mark has increased 22.5% in the past 60 days.

For quarterly revenues, the consensus mark is pegged at nearly $1.24 billion, suggesting an increase of 15.1% from the year-ago quarter’s figure.

What Our Model Unveils for EAT

Our proven model predicts a likely earnings beat for Brinker this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

EAT’s Earnings ESP: Brinker has an Earnings ESP of +9.99%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

EAT’s Zacks Rank: The company has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Shaping Brinker’s Q2 Performance

Brinker’s fiscal second-quarter top line is expected to increase year over year, courtesy of its effective marketing strategies, improved menu pricing, higher traffic and a favorable menu item mix. The company’s focus on enhancing core menu offerings at Chili’s, such as its “core four” and “five to drive” strategies, is expected to have boosted top-line performance. Additionally, Maggiano’s operational improvements, including service speed enhancements and menu updates, are likely to have contributed to sales growth.

Brinker’s digitalization initiatives, including improved order management systems, are expected to have streamlined operations and enhanced customer experience in the fiscal second quarter. This and the emphasis on social media campaigns targeting younger demographics may have contributed to guest check and comps growth in the to-be-reported quarter. Our model predicts fiscal second quarter comps to rise 10.1% year over year.

Our model predicts Chili’s revenues to grow 9.3% year over year to $1.01 billion, while Maggiano’s revenues are estimated to increase 2.9% to $151.2 million. The combined impact of pricing strategies, menu innovation and operational upgrades is anticipated to have strengthened EAT’s fiscal second-quarter revenue base.

Brinker’s fiscal second quarter bottom line is expected to have improved year over year, backed by strategic pricing initiatives, effective cost management and a focus on higher-margin menu items. The company’s emphasis on balancing value offerings (with margin expansion), adapting to changing consumer preferences and continuing menu innovation are expected to support margin growth in the to-be-reported quarter.

However, inflationary pressures on labor and commodities, along with elevated operating costs, are likely to have partially offset margin gains. Rising input costs and strategic investments in technology upgrades might weigh on the company’s profitability in the fiscal second quarter. Our model predicts total operating costs to increase by 6.6% year over year to $1.08 billion.

EAT Price Performance & Valuation

Shares of Brinker have surged 56.5% in the past three months, outperforming the Zacks Retail – Restaurants industry’s fall of 1.9%. EAT has also outpaced other industry players like McDonald's Corporation MCD, down 0.6%, Domino's Pizza, Inc. DPZ, up 4.4%, and Yum! Brands, Inc. YUM, down 2.3% in the same time frame.

The uptick in share price was primarily backed by the company’s strategic menu innovation, customer-centric promotions and operational efficiency improvements. Additionally, favorable consumer trends and improved traffic trends have been driving the company.

3-Months EAT Stock Price Performance

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From a valuation perspective, EAT is trading at a discount. The company has a forward 12-month price-to-earnings of 23X, below the industry average of 25.59X.

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Brinker’s Investment Considerations

Brinker’s strategic initiatives and operational enhancements position it as a compelling investment opportunity. The company continues to drive growth at Chili’s by focusing on its core menu offerings, including burgers, crispers, fajitas, and margaritas. The introduction of the Triple Dipper has further bolstered sales, particularly among younger demographics, with the item achieving 70% year-over-year growth. Additionally, the “3 for Me” value bundle remains a strong driver of guest satisfaction and traffic, combining quality and affordability to maintain a competitive edge in the casual dining space.

Brinker’s long-term strategy emphasizes operational efficiency, guest engagement, and innovation. At Maggiano’s, the company is simplifying operations by streamlining the menu and phasing out less profitable offerings (such as $6 take-home pasta) to focus on enhancing food quality and service speed. The brand is also revitalizing its appeal with innovations like table-side dishes and new cocktails that elevate the dining experience. Across both brands, Brinker is implementing Oracle ERP systems to improve back-office stability, streamline financial processes, and optimize supply chain management.

With its dual focus on enhancing operations and leveraging data-driven insights to attract new customers, Brinker is well-positioned for sustained growth. The company’s ability to innovate and adapt, combined with strategic investments in technology and guest experience, underscores its commitment to long-term success in the competitive restaurant industry.

Conclusion

Brinker’s upcoming fiscal second-quarter earnings report is set against a backdrop of strong operational performance, strategic innovation, and impressive stock price gains. The company’s focus on menu enhancements, effective marketing campaigns, and digital transformation has bolstered both customer engagement and revenue growth.

While challenges such as inflationary pressures and rising input costs persist, Brinker’s strategic pricing initiatives, operational efficiencies and emphasis on higher-margin offerings provide a solid foundation for sustained performance. Given the company’s track record of exceeding expectations and its continued focus on long-term growth, Brinker remains a compelling investment opportunity as it navigates the evolving restaurant industry landscape.

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