Why Brinker International Stock Plummeted by Almost 17% This Week

Motley Fool
05-03
  • The company posted some encouraging numbers in its latest earnings report.
  • This wasn't good enough to calm investors who were nervous about the restaurant sector's immediate future, however.

Brinker International (EAT 2.36%), the operator of popular restaurant chains, wasn't all that popular with investors over the past few days.

Its stock price took a tumble of nearly 17% over the course of the week, according to data compiled by S&P Global Market Intelligence, due mostly to a quarterly earnings report the market didn't find very appetizing. Several analyst price target cuts added to the bearishness.

A hard-to-impress market

For its fiscal third quarter of 2025, Brinker, which owns the Chili's and Maggiano's Little Italy restaurant chains and franchises, booked revenue of just under $1.43 billion. That was a beefy 27% increase year over year, and it also topped the average analyst estimate of $1.37 billion.

Image source: Getty Images.

The story was similar on Brinker's bottom line, as the company's generally accepted accounting principles (GAAP) net income more than doubled across the one-year stretch to $119 million. On a non-GAAP (adjusted), per-share basis, that profitability increased to $2.66 from $1.24. The consensus pundit projection was $2.49.

It seems that these days, investors are worried about the effect of the current trade war on the U.S. economy. Typically, nonessential spending like restaurant meals is among the first household budget item to be sacrificed when tightening expenses.

A company on the brink

Given that, it wasn't altogether shocking that some analysts tracking Brinker stock are at least slightly less bullish than they were previously on its future.

Pundits at Wells Fargo and Barclays both cut their price targets on the restaurateur. The former's John Parke reduced his to $150 per share from $165, while the latter's Jeffrey Bernstein cut his down to $155 from $165. Tellingly, both maintained their equivalents of hold recommendations on the shares.

I'd be more optimistic about Brinker than either investors at large or the two analysts. The company has proven that it can post impressive growth numbers -- no mean feat in the challenging restaurant industry. If any such company is going to survive and thrive in an economic downturn, it's Brinker.

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