Brinker International Stock Rises on 'Buy' Rating from Seaport Global

Shares of Brinker International Inc. (NYSE:EAT) rose 2.6% in Wednesday trading after Seaport Global Securities initiated coverage of the restaurant operator with a Buy rating. The firm set a price target of $230.00 for the stock, signaling significant upside potential.

Analyst Thesis: Chili's Turnaround

In a note to clients, Seaport Global analyst Eric Gonzalez highlighted the successful turnaround of Brinker's flagship Chili's brand as a primary driver for the optimistic outlook. The analyst pointed to a consistent track record of strong performance and operational improvements.

Key achievements cited in the report include:

• 21 consecutive quarters of comparable sales growth at Chili's.
• An increase in average unit volumes from $3 million to $5 million.
• Restaurant margin expansion of approximately 600 basis points to the high-teen percentage range.

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Gonzalez also noted Brinker's forward-looking growth strategy, which includes remodeling 10% of its restaurant fleet annually, restarting new unit development, and expanding its off-premises business operations.

Valuation and Outlook

Seaport's analysis noted that Brinker currently trades at a valuation of 14 times its calendar 2027 estimated earnings and approximately 11 times its estimated 2027 EBITDA. This is compared to a peer average of 20x for next-twelve-months price-to-earnings.

The analyst argued that a premium valuation to Brinker's historical average is warranted, based on category-leading traffic, market share gains, and a management team that has consistently exceeded performance targets. The report also pointed to a multi-year unit growth opportunity and a strong balance sheet with leverage of less than one turn. Seaport's $230 price target is based on a multiple of 16 times the firm's calendar 2027 earnings per share estimate.