Higher revenue expectations
Higher year-over-year earnings per share expectations, as we saw in the chart of the previous article in this series, naturally come from Brinker International’s (EAT) higher revenue expectations, as you can see in the chart below.
Wall Street analysts estimate revenues of $733 million, a 4% year-over-year increase from the $704 million in the second quarter a year ago and a 3% increase sequentially from the $711 in the first quarter of 2015. Gross margins are also expected to increase to 19% sequentially from 17.3% in 1Q15.
Brinker International (EAT) earns revenues from its two brands—Chili’s and Maggiano’s. The majority of its restaurants are Chili’s locations, which naturally contribute the majority—~85%—of the company’s revenues.
Peers to grow at a rate of less than 1%
Bloomin’ Brands (BLMN) is expected to report revenues of $1.1 billion, which is a 0.21% year-over-year growth. Darden Restaurants (DRI) is expected to report $1.7 billion, and The Cheesecake Factory (CAKE) is expected to report revenues of $508 million. Both DRI and CAKE are estimated to grow less than 1% year-over-year.
Brinker International has taken several initiatives, especially at Chili’s, to improve sales and increase customer walk-ins. We’ll take a look at some of these initiatives that have helped the company turn around its sales. These initiatives are expected to continue their effect in the coming quarters.
A broad portfolio of stocks, the Consumer Discretionary Fund (XLY) includes several restaurant stocks mentioned above, including some of those we’ve mentioned in this series.
To understand the health of these revenues, we’ll take a look at same-store sales in the next part of this series.