What happened

Shares of Bloomin' Brands (BLMN -0.56%) sank 13.4% in February, according to data provided by S&P Global Market Intelligence.

The owner of the Outback Steakhouse chain of restaurants reported a good set of fourth-quarter fiscal year 2019 earnings. Comparable restaurant sales grew by 2.7% for Q4 2019 at Outback, while its restaurants in Brazil saw an even larger jump at 4.9%.

Total revenue for the fiscal year was up marginally, and adjusted diluted earnings per share crept up 2.7% year over year. In a show of confidence, the company doubled its annual dividend from $0.40 to $0.80 per year. This makes Bloomin' Brands one of the more desirable restaurant stocks to own at the moment.

A beef steak sliced on a cutting board.

Image source: Getty Images.

So what

Recall that the company had announced back in November 2019 that it was exploring alternatives to maximize value for shareholders, including a possible sale of the company. CEO Dave Deno provided an update at the recent conference call and reaffirmed this.

This news has been holding up the share price at the $20 level, but then came news of the COVID-19 outbreak hitting the U.S. in late February. By Feb. 28, there were around 59 confirmed cases of the coronavirus in the U.S., which triggered a bout of selling in restaurant and café stocks.

Shares in Bloomin' Brands plunged a steep 23% in just one week, beginning Feb. 21, culminating in a total decline of 13.4% for February, even though the company had provided a somewhat positive outlook for all its restaurant brands on the call just a few days prior.

Now what

At this point, it's difficult to quantify the potential negative impact arising from the community spread of COVID-19. As of the date of writing, the death toll in the U.S. has risen to nine, and it's uncertain whether things may get worse at this point.

Ultimately, Bloomin' Brands may continue to suffer unless the virus situation resolves quicker than anticipated. However, investors should also realize that this is just one of many temporary negative events that may impact the company.