EAT Surges 69% in 3 Months: Is the Stock Still Attractive?

Brinker International, Inc. EAT has delivered an impressive run, with shares advancing about 69.4% over the past three months. Over the same period, the industry and the S&P 500 have gained 1.3% and fallen 0.4%, respectively.

The sharp gain reflects improving fundamentals at its Chili’s business, where sustained traffic growth, successful menu launches and stronger restaurant economics have strengthened Brinker’s growth outlook. The company’s latest results suggest that the turnaround is gaining traction.

Notably, Brinker has outperformed peers such as Wingstop Inc. WING, Shake Shack Inc. SHAK and Domino's Pizza, Inc. DPZ during this period.

Price Performance

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Chili’s Continues to Drive Growth

Chili’s remains the centerpiece of Brinker’s investment story. The brand generated 6% comparable-sales growth in the fourth quarter, marking its 21st consecutive quarter of same-store sales growth. The result was particularly impressive, as Chili’s delivered another solid increase after posting a strong 24% comparable-sales gain in the year-ago quarter. Over the past three years, Chili’s comparable sales have grown roughly 50%.

Traffic is becoming an increasingly important component of that growth. Fourth-quarter comparable sales increased 5.6%, driven by 1.5% traffic growth and 4.3% pricing, with a 0.2% negative mix impact. Management also noted that sales and traffic accelerated significantly in July and August, offering an encouraging start to fiscal 2027.

Chili’s focus on value is helping the brand attract consumers across income groups. Management noted that the average per-person spend at Chili’s remains $3-$4 below competitors, reinforcing its value positioning and helping generate a cycle of higher traffic, sales growth, margin improvement and reinvestment.

Big Crispy Strengthens the Brand

Menu innovation is another important growth driver. The Big Crispy Chicken Sandwich has significantly exceeded management’s initial expectations. Daily sales climbed from around 20 sandwiches per restaurant before its launch to 55 by the end of the fourth quarter, representing a 175% increase. Management said sales continued to build during the quarter.

The product joins other successful offerings, including the Big Smasher, Big QP and Triple Dipper, which have helped Chili’s attract new customers. Marketing initiatives such as Margarita of the Month and refreshed advertising campaigns are also helping maintain the brand’s visibility and relevance.

Improving Margins Could Support Earnings

Brinker is also benefiting from better operating leverage. Fiscal 2026 revenues increased 7.9%, restaurant operating margin expanded 30 basis points and adjusted EPS advanced 20.6%. In the fourth quarter, revenues totaled $1.536 billion, while adjusted EPS rose 23% year over year to $3.07.

Restaurant operating margin improved to 18% from the prior year, aided by sales leverage. Labor costs were particularly favorable, improving 90 basis points year over year despite wage inflation and higher health-insurance costs.

Management expects further margin improvement as the business grows. Rather than simply maximizing near-term profitability, Brinker plans to reinvest in food, restaurant atmosphere and the overall guest experience. This approach could help sustain traffic gains and strengthen the brand over time.

Expansion Adds to the Long-Term Opportunity

Brinker’s fiscal 2027 outlook also supports the bullish case. The company expects revenues of $6.15 billion to $6.27 billion and adjusted EPS of $12.60 to $13.40. Its assumptions include mid-single-digit comparable-sales growth and positive traffic at Chili’s for the remainder of the year. The outlook also includes the benefit of a 53rd operating week.

EAT is simultaneously investing in its restaurant base. After completing 11 Chili’s reimages in fiscal 2026, Brinker plans to complete another 60 to 80 in fiscal 2027. New-unit growth is expected to be modest initially but accelerate from fiscal 2028, with a stronger development pipeline already taking shape.

Brinker’s Bottom Line Continues to Strengthen

Brinker’s earnings outlook remains encouraging, with estimates pointing to solid profit growth over the next two fiscal years. The company is expected to generate $13.01 in earnings per share in fiscal 2027, representing a 21.1% year-over-year increase. Earnings are projected to rise further in fiscal 2028, reaching $13.90 per share, up 6.8% from the prior-year level.

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The continued improvement in earnings reflects Brinker’s strong operating momentum, particularly at Chili’s, where healthy traffic, menu innovation and improved restaurant-level economics are supporting profitability. If the company maintains this momentum, sustained earnings growth could provide further support for EAT shares.

EAT Offers Attractive Valuation

Despite its strong stock performance over the past three months, Brinker does not appear excessively valued relative to several restaurant peers. EAT currently trades at 17.32X forward 12-month earnings, which is below the industry average and suggests that the stock still offers a relatively reasonable valuation.

The valuation looks even more appealing when compared with several high-growth restaurant stocks. Wingstop, Shake Shack and Domino’s Pizza trade at forward P/E of 22.35X, 53.53X and 17.19X, respectively. While each company has its own growth profile, EAT’s lower valuation multiple, combined with its strong earnings outlook, could make the stock an attractive option for investors seeking a balance between growth and valuation.

EAT P/E Ratio (Forward 12 Months)

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Does EAT Still Have Room to Run?

Brinker’s rally appears to be supported by a meaningful improvement in its underlying business rather than short-term market enthusiasm alone. Chili’s continues to strengthen its competitive position through compelling value, successful menu innovation, rising traffic and a more engaging guest experience, while improving restaurant economics are translating into stronger profitability.

The company also has additional growth opportunities through restaurant reimaging, new-unit development and disciplined capital allocation. At the same time, the stock’s valuation remains relatively reasonable compared with several restaurant peers, making the risk-reward profile appealing. With earnings momentum, a strengthening core brand and multiple avenues for future growth, investors may consider adding EAT to their portfolios as Brinker’s turnaround story continues to mature.

The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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