NEW YORK (TheStreet) -- Shares of Brinker International Inc. (EAT - Get Report) are higher by 1.26% to $46.57 at the start of trading today following a ratings upgrade to "overweight" from "neutral" at JPMorgan (JPM - Get Report).
The firm said it raised its rating on the company, which owns, operates, and franchises the Chili's Grill and Bar, and Maggiano's Little Italy restaurant brands, based on a recent pullback in shares and Brinker's upside potential.
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"We rate BRINKER INTL INC (EAT) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
Separately, TheStreet Ratings team rates BRINKER INTL INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
- EAT's revenue growth has slightly outpaced the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 2.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- BRINKER INTL INC has improved earnings per share by 15.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BRINKER INTL INC increased its bottom line by earning $2.21 versus $1.89 in the prior year. This year, the market expects an improvement in earnings ($2.73 versus $2.21).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 8.3% when compared to the same quarter one year prior, going from $51.95 million to $56.26 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, BRINKER INTL INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: EAT Ratings Report