The title for this month’s commentary sums up everything quite well: “It’s Complicated.” That’s because you can easily see the elements that would bring about a recession and a bear market...just as simply as you can imagine how any positive momentum on tariffs puts these nightmares behind us. I like Brinker International Inc. (EAT) here, highlights Steve Reitmeister, editor of Zen Investor.
You know Brinker better as the restaurant company that owns Chili’s. They are on a heck of an earnings momentum run since late 2022, one where EPS has risen 3X and the share price has rallied 6X from valley to recent peak.
Brinker International Inc. (EAT)
Just like most stocks, they hit the skids earlier this year. But the continued selloff after their most recent beat-and-raise is a bit of a head scratcher.
From what I see, their only concern with tariffs is the cost of avocados. If that is your biggest problem...then you don’t really have a problem. The growth prospects for the Chili’s brand should remain quite robust.
This is best seen in the $8.78 EPS estimate for this year, which is more than twice as much as last year’s $4.10. The pace of growth is expected to moderate into 2026, yet still be impressive.
The Zen Ratings are picking up on the fundamental attractiveness of EAT shares, with an “A” rating overall.
Top analysts are also picking up what EAT is putting down. Like the $170 target from John Tower of Citigroup. Even better is the $208 Street-high target from the analyst at Goldman Sachs.
With shares trading around $135, and such a bright earnings outlook, I am happy to EAT up these shares.
Recommended Action: Buy EAT.
