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Why Bloomin' Brands Inc. Shares Served Up a Feast of Gains Today

By Alex Planes - Feb 25, 2014 at 6:33PM

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Is this meaningful? Or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Bloomin' Brands Inc (BLMN -4.70%) finished the day with a 14% pop after the parent company of Outback Steakhouse, Bonefish Grill, and other well-known sit-down chains reported market-topping earnings for its fiscal fourth quarter.

So what: Bloomin's fourth-quarter revenue of $1.05 billion, of which $1.04 billion came from restaurant sales. Analysts were expecting $1.05 billion from restaurant operations, but were willing to overlook this very narrow miss in favor of Bloomin's 35% year-over-year rise in adjusted earnings to $0.27 per share, a penny better than what Wall Street had expected. The company's baseline earnings were higher, at $0.46 per share, largely as a result of Bloomin's acquisition of a controlling stake in its Brazilian locations, which contributed $36.6 million to Bloomin's $59 million GAAP net income.

Bloomin's forward guidance is now pegged at $4.4 billion (or more) in revenue and at least $1.21 in EPS for the full fiscal year, which was modified by Bloomin's shift to a 52- or 53-week fiscal year rather than a calendar-based fiscal year. Analysts were looking for more: the consensus was for $4.52 billion in full-year revenue and $1.28 in EPS.

Now what: With an adjusted forward P/E of 21.7 and anticipated year-over-year revenue growth of roughly 7%, Bloomin' is sitting in a state of uncertainty for investors that lies somewhere between "good bargain" and "fully valued waste of investment money." Its valuation is a fair bit lower than the industry average P/E of about 28, which means that it could rise to meet its peers in the middle even without any significant growth on top or bottom lines. I'd dig a little deeper before deciding to put money into Bloomin', but today's earnings offer plenty of data from which to begin.

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Alex Planes and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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