Brinker International, Inc. (EAT) Is a Trending Stock: Facts to Know Before Betting on It

Brinker International (EAT) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.Over the past month, shares of this operator of restaurant chains Chili's Grill & Bar and Maggiano's Little Italy have returned -5.4%, compared to the Zacks S&P 500 composite's +4% change. During this period, the Zacks Retail - Restaurants industry, which Brinker International falls in, has gained 0.8%. The key question now is: What could be the stock's future direction?While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.Revisions to Earnings EstimatesHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.Brinker International is expected to post earnings of $2.39 per share for the current quarter, representing a year-over-year change of +48.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.2%.The consensus earnings estimate of $8.79 for the current fiscal year indicates a year-over-year change of +114.4%. This estimate has changed +0.7% over the last 30 days.For the next fiscal year, the consensus earnings estimate of $9.64 indicates a change of +9.6% from what Brinker International is expected to report a year ago. Over the past month, the estimate has changed +0.7%.With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Brinker International.The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:12 Month EPSRevenue Growth ForecastWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.For Brinker International, the consensus sales estimate for the current quarter of $1.4 billion indicates a year-over-year change of +16.2%. For the current and next fiscal years, $5.35 billion and $5.52 billion estimates indicate +21.1% and +3.2% changes, respectively.Last Reported Results and Surprise HistoryBrinker International reported revenues of $1.43 billion in the last reported quarter, representing a year-over-year change of +27.2%. EPS of $2.66 for the same period compares with $1.24 a year ago.Compared to the Zacks Consensus Estimate of $1.38 billion, the reported revenues represent a surprise of +3.35%. The EPS surprise was +7.26%.Over the last four quarters, Brinker International surpassed consensus EPS estimates three times. The company topped consensus revenue estimates each time over this period.ValuationWithout considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.Brinker International is graded B on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Brinker International. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. They includeStock #1: A Disruptive Force with Notable Growth and ResilienceStock #2: Bullish Signs Signaling to Buy the DipStock #3: One of the Most Compelling Investments in the MarketStock #4: Leader In a Red-Hot Industry Poised for GrowthStock #5: Modern Omni-Channel Platform Coiled to SpringMost of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. While not all picks can be winners, previous recommendations have soared +171%, +209% and +232%.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Brinker International, Inc. (EAT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks