Brinker Lags EPS, Lowers 2Q Outlook - Analyst Blog
26 Ottobre 2012 - 10:30AM
Zacks
Dallas, Texas-based Brinker
International Inc. (EAT), recently reported first-quarter
2013 adjusted earnings of 37 cents per share, lagging the Zacks
Consensus Estimate by a penny, but up 23.3% from the year-ago
quarter earnings of 30 cents per share.
Total revenue nudged up 2.0% year over year to $683.5 million due
to a 2.7% hike in system-wide comparable restaurants sales.
Quarter Performance
Chili's Grill & Bar restaurant reported revenues of $581.3
million, up 2.7% year over year, while Maggiano's sales crept up
0.9% to $82.4 million in the quarter. However, Royalty and
franchise revenue slid 3.9% to $19.8 million, due to a dip in gift
card breakage income, partially offset by rise in royalty
revenues.
Comparable restaurant sales at Chili's Grill & Bar restaurant
climbed up 2.8% for the sixth consecutive quarter, benefiting from
a 0.4% rise in traffic, 1.4% spike in menu price and 1% favorable
mix-shift. Same-restaurant sales at Maggiano's inched up 0.9% for
the 11th time in a row driven by menu price (up 2.6%) and mix-shift
(up 0.8%), partially offset by lower traffic of 2.5%.
Comparable restaurant sales at franchised restaurants ascended
2.9%, aided by growth of 3.7% and 1.31% in franchised domestic and
international, respectively.
Restaurant operating margin enhanced 150 basis points (bps) year
over year to 14.6%, aided by the initiatives that have streamlined
staffing, and upgraded kitchen and point of sale systems.
Restaurant margins at Chili’s Grill & Bar expanded on lower
restaurant labor and restaurant expenses as well as flat cost of
sales. Restaurant margin at Maggiano's improved mainly on better
cost of sales, lower credit card fees and benefits from sales
leverage on fixed costs related to higher revenue.
Liquidity Position
At the end of 2012, the company had current assets of $190.6
million and shareholders’ equity of $268.1 million.
Share Repurchase
During the quarter, the company repurchased 2.5 million shares for
approximately $86.3 million and currently has $579 million
remaining under the share repurchase authorization.
Unit Update
During the quarter, the company opened nine international franchise
restaurants and closed five franchise-owned Chili's restaurant.
At the end of the quarter, Brinker operated 1,585 restaurants, of
which 1,274 were Chili’s, 44 were Maggiano's and 267 franchised
restaurants in the international market. The international
franchise restaurants operate 266 Chili’s restaurants and one
Maggiano’s restaurant in 32 countries and two territories.
Outlook
For 2013, Brinker expects adjusted earnings to be in the range of
$2.30 to $2.45, up 17% to 25%. The company anticipates comparable
restaurant sales for full-year to increase 2–3% year over year and
operating margin to expand by 100 bps.
As a result of unfavorable employment environment leading to lower
consumer spending and slowing restaurant industry sales, the
company, for the second quarter of 2013, anticipates comps growth
at or even below the 2%–3% guidance and earnings in the range of 48
cents to 50 cents, down from the provided range of 17% to 25% for
2013.
Our Take
Brinker remains optimistic about improving its margin by 400 basis
points and to double its EPS by 2015, supported by top-line growth
and improving operational efficiencies. However, the outlook for
the next quarter remains weak, owing to feeble growth in employment
and frail industry sales. Hence, we expect estimates to go down for
the second quarter of 2013. The Zacks Consensus Estimates for the
next quarter is pegged at 55 cents.
Brinker currently retains a Zacks #3 Rank, which translates into a
short-term ‘Hold’ rating. We are also maintaining our long-term
‘Outperform’ recommendation on the stock.
Chipotle Mexican Grill Inc. (CMG), one of
Brinker’s peers, reported third-quarter 2012 earnings of $2.27 per
share, which fell shy of the Zacks Consensus Estimate of $2.30.
However, the result was ahead of the year-ago earnings of $1.90 per
share. Double-digit top-line growth and margin expansion led to the
year-over-year growth in earnings.
CHIPOTLE MEXICN (CMG): Free Stock Analysis Report
BRINKER INTL (EAT): Free Stock Analysis Report
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