EAT Brinker International Inc

Analysts continued to revise their estimates higher for both 2012 and 2013, sending the stock to a Zacks #2 Rank (Buy). Management also stated that it remains on track to double EPS by 2015.

In addition to earnings growth, the company pays a dividend that yields a solid 2.4%. The valuation picture looks attractive too, with shares trading at a PEG ratio of 1.0.

EAT at Brinker

Brinker International owns, operates or franchises 1,578 restaurants under the Chili's Grill & Bar (1,533 restaurants) and Maggiano's Little Italy (45 restaurants) brands.

The company is headquartered in Dallas, Texas and has a market cap of $2.1 billion.

First Quarter Results

Brinker delivered better than expected results for the first quarter of its fiscal 2012. Earnings per share came in at 30 cents, a 43% increase over the same quarter in 2011. It was also 3 cents ahead of the Zacks Consensus Estimate.

Total revenues rose 2% to $668.4 million as system-wide same-store sales increased 2.0%. Same-store sales at Chili's rose 1.7% while Maggiano's recorded a 3.5% increase.

Meanwhile, the restaurant operating margin continued to improve, rising 80 basis points to 15.8%.

Growth

Following strong Q1 results, analysts revised their estimates higher for both 2012 and 2013, sending the stock to a Zacks #2 Rank (Buy). Based on consensus estimates, analysts are projecting 22% EPS growth this year and 16% EPS growth next year.

Management also recently stated that it is still on track to double EPS by 2015.

... and Income

In addition to strong earnings growth, Brinker pays a dividend that yields a solid 2.4%. Since it began paying a dividend in late 2005, the company has raised it at an average annual rate of 16%.

At a Reasonable Price

Although shares of EAT are up 24% since I last wrote about it on September 7, the valuation picture still looks reasonable.

Shares trade at just 13.2x 12-month forward earnings, a significant discount to the industry median of 18.6x, and below its 10-year median of 14.5x.

Its PEG ratio is 1.0 based on a consensus long-term growth rate of 13.0%.

The Bottom Line

Brinker continues to offer investors strong earnings growth potential and strong income at a very reasonable price.

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Hawaiian Electric Industries, Inc. (HE) offers earnings growth potential and a juicy 4.8% dividend yield at a reasonable price. Estimates have been rising after the company delivered better than expected results for the third quarter. It is a Zacks #2 Rank (Buy) stock. The company also offers a dividend that yields a stellar 4.8%. Read the full article.

Tanger Factory Outlet Centers, Inc. (SKT) delivered better than expected results for the third quarter, driven by higher rental and occupancy rates. Analysts revised their estimates higher for both 2011 and 2012 off the strong quarter, sending the stock to a Zacks #2 Rank (Buy). The company has also been steadily raising its dividend. It currently yields 2.7%. Read the full article.

Herbalife Ltd. (HLF) delivered outstanding results for the third quarter of 2011 as sales surged around the globe. It was also the company's 25th consecutive positive earnings surprise. The company continues to generate strong free cash flow, which it has been using to return value to shareholders through stock buybacks and dividends. It currently yields 1.5%. Valuation is reasonable too, with shares sporting a PEG ratio of 1.1. Read the full article.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Co-Editor of the Reitmeister Value Investor.

 
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