Brinker International, Inc (NYSE: EAT)

Sector: Consumer Cyclical Industry: Restaurants CIK: 0000703351
Market Cap 6.62 Bn
P/B 19.24
P/E 14.90
P/S 1.18
ROIC (Qtr) 25.32
Div Yield % 0.00
Rev 1y % (Qtr) 18.45
Total Debt (Qtr) 1.80 Bn
Debt/Equity (Qtr) 5.23

About

Brinker International, Inc., or more commonly known as EAT, is a prominent player in the casual dining industry, with its operations spanning across two well-established restaurant brands, Chili's Grill & Bar and Maggiano's Little Italy. The company's roots trace back to 1977, and it has continually adapted to the evolving preferences and trends of consumers over the years. Brinker International's primary revenue generation comes from its two main brands, Chili's and Maggiano's, along with its virtual brand, It's Just Wings. Chili's is a casual...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 737M provides robust 0.41x coverage of total debt 1.80B, indicating excellent debt servicing capability and financial flexibility.
  • Robust free cash flow of 470.80M exceeds capital expenditure of 266.20M by 1.77x, indicating strong organic growth funding capability.
  • Operating cash flow of 737M provides exceptional 14.95x coverage of interest expenses 49.30M, showing strong debt service capability.
  • Operating cash flow of 737M provides strong 22.89x coverage of stock compensation 32.20M, indicating sustainable incentive practices.
  • Strong operating cash flow of 737M provides 3.24x coverage of SG&A expenses 227.40M, showing efficient operational cost management.

Bear case

  • Operating cash flow of 737M barely covers its investment activities of (264.80M), with a coverage ratio of -2.78, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating earnings of 574.60M show weak coverage of depreciation charges of 213.90M, with a 2.69 ratio indicating high capital intensity and potential reinvestment needs.
  • High financing cash flow of (454.80M) relative to working capital of (401.50M), which is 1.13x suggests concerning dependence on external funding for operational needs.
  • Free cash flow of 470.80M represents just -1.52x of debt issuance (310M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Cash position of 33.60M provides weak coverage of payables of 160.30M, which is 0.21x, indicating potential working capital stress and supplier relationship risks.

Peer comparison

Companies in the Restaurants
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MCD Mcdonalds Corp 222.05 Bn 26.39 8.45 55.82 Bn
2 SBUX Starbucks Corp 95.51 Bn 51.45 2.57 26.61 Bn
3 CMG Chipotle Mexican Grill Inc 50.94 Bn 33.15 4.32 4.98 Bn
4 YUM Yum Brands Inc 43.17 Bn 29.83 5.36 11.55 Bn
5 QSR Restaurant Brands International Inc. 22.43 Bn 24.33 2.42 15.64 Bn
6 DRI Darden Restaurants Inc 21.91 Bn 19.91 1.77 6.16 Bn
7 YUMC Yum China Holdings, Inc. 18.12 Bn 20.05 1.57 1.84 Bn
8 DPZ Dominos Pizza Inc 14.57 Bn 24.72 3.01 5.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.05 2.05
EV to Cash from Ops. EV/CFO 11.22 16.57
EV to Debt EV to Debt 4.60 4.75
EV to EBIT EV/EBIT 14.40 3.45
EV to EBITDA EV/EBITDA 10.51 9.76
EV to Free Cash Flow [EV/FCF] EV/FCF 17.57 29.06
EV to Market Cap EV to Market Cap 1.25 6.55
EV to Revenue EV/Rev 1.48 2.40
Price to Book Value [P/B] P/B 19.24 -1.40
Price to Earnings [P/E] P/E 14.90 13.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -9.56
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 18.72
Dividend per Basic Share Div per Share (Qtr) 0.00 0.84
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 30.41
Interest Coverage Int. cover (Qtr) 11.66 -86.85
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -30.62 -24.56
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 107.41 35.50
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -0.72
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 98.50 -564.81
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 80.18 25.78
EBIT Growth (1y) % EBIT 1y % (Qtr) 119.06 -507.68
EBT Growth (1y) % EBT 1y % (Qtr) 162.65 -41.98
EPS Growth (1y) % EPS 1y % (Qtr) 138.42 -126.51
FCF Growth (1y) % FCF 1y % (Qtr) 112.26 5,724.78
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 55.14 23.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 2.06 0.99
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.07
Cash Ratio Cash Ratio (Qtr) 0.05 0.78
Current Ratio Curr Ratio (Qtr) 0.35 1.47
Debt to Equity Ratio Debt/Equity (Qtr) 5.23 0.05
Interest Cover Ratio Int Coverage (Qtr) 11.66 -86.85
Times Interest Earned Times Interest Earned (Qtr) 11.66 -86.85
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 14.10 7.71
EBIT Margin % EBIT Margin % (Qtr) 10.27 -2.27
EBT Margin % EBT Margin % (Qtr) 9.39 -1.97
Gross Margin % Gross Margin % (Qtr) 18.70 34.04
Net Profit Margin % Net Margin % (Qtr) 7.90 -3.69