Feeling peckish? Drop by Brinker
Wall Street Wisdom:
- General consensus. Twenty-five analysts follow Brinker and are split on their opinions. Twelve say buy; 12 advise holding; and the tiebreaker: one brave soul says sell.
- Revenues. This gaggle of analysts agrees that Brinker should post $1.01 billion in sales tomorrow, a 7% rise over last year.
- Earnings. This may explain the sell: Despite the revenue growth, analysts expect a $0.01 year-over-year decline in earnings to $0.46 for the quarter.
Margin watch:
Reviewing the company's recent performance in transforming top-line sales into bottom-line profits, here's what we see:
|
Margins |
6/04 |
9/04 |
12/04 |
3/05 |
6/05 |
9/05 |
|---|---|---|---|---|---|---|
|
Gross |
17.6% |
17.6% |
17.2% |
16.9% |
16.1% |
16.0% |
|
Op. |
8.6% |
8.6% |
8.1% |
8.1% |
7.3% |
7.1% |
|
Net |
4.1% |
3.3% |
3.2% |
4.5% |
4.1% |
4.4% |
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-months performance for the quarters ending in the named months.
Brinker's bottom-line performance still looks pretty solid. Still, gross margins appear to be facing pressure, and the company hasn't been able to cut operating costs sufficiently to offset them. Beware. (Learn more about margins here.)
Key ratios:
Even with analysts predicting healthy 15%-per-annum growth over the next five years, this meal looks expensive. It's priced at 20 times multiples to both earnings and free cash flow.
Competitors:
If there's one thing America has plenty of, it's restaurants. Brinker faces competition from a host of alternative eateries, among them Applebee's
Fool contributor Rich Smith does not own shares of any company named above.
