Brinker International (EAT) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this operator of restaurant chains Chili's Grill & Bar and Maggiano's Little Italy, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Brinker International, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.
The company is expected to earn $1.71 per share for the current quarter, which represents a year-over-year change of +37.9%.
Over the last 30 days, three estimates have moved higher for Brinker International compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 5.12%.
For the full year, the company is expected to earn $6.23 per share, representing a year-over-year change of +51.95%.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, four estimates have moved up for Brinker International versus no negative revisions. This has pushed the consensus estimate 14.11% higher.
Thanks to promising estimate revisions, Brinker International currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Brinker International shares have added 32.6% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.
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