Brinker International Stock Climbs 38% Over Past Month, Analyst Turns Bullish Despite Outperformance

Shares of Brinker International, Inc. EAT ended Tuesday's trading lower, after hitting a record high earlier in the session.

The casual dining restaurant company, which owns the Chili’s and Maggiano’s Little Italy brands, trades at a slight discount on price/sales and price/earnings.

The stock price does not fully reflect the company's improved earnings outlook, according to Argus Research Group’s Christine Dooley.

The Brinker International Analyst: Dooley upgraded the rating for Brinker International from Hold to Buy, while keeping the price target at $72.

The Brinker International Thesis: Against the backdrop of elevated cost inflation, the company undertook several initiatives to improve restaurant margins, including raising menu prices and scaling back discounting and promotions, Dooley said in the upgrade note.

Check out other analyst stock ratings.

"The company has also simplified operational processes, revamped its menu, and improved employee retention," the analyst wrote. Early signs suggest that Brinker International's revenue and margins are "headed in the right direction,” and management's aggressive financial targets are "starting to hit," she added.

"The company's EPS growth is expected to accelerate to a double-digit rate over the next three years," Dooley wrote.

She further stated that the shares are trading near the midpoint of their annual historical range and below the average multiple for a peer group.

EAT Price Action: Shares of Brinker International had declined by 1.04% to close at $63.84 on Tuesday.

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