Brinker International (EAT) Flagged As A Storm The Castle Stock

Trade-Ideas LLC identified Brinker International (EAT) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Brinker International

(

EAT

) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Brinker International as such a stock due to the following factors:

  • EAT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $53.4 million.
  • EAT has traded 331,458 shares today.
  • EAT is trading at 2.14 times the normal volume for the stock at this time of day.
  • EAT crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on EAT:

Brinker International, Inc., together with its subsidiaries, engages in the ownership, development, operation, and franchise of casual dining restaurants worldwide. The stock currently has a dividend yield of 2.8%. EAT has a PE ratio of 14. Currently there are 4 analysts that rate Brinker International a buy, 1 analyst rates it a sell, and 12 rate it a hold.

The average volume for Brinker International has been 1.3 million shares per day over the past 30 days. Brinker International has a market cap of $2.6 billion and is part of the services sector and leisure industry. The stock has a beta of 0.06 and a short float of 10.9% with 5.75 days to cover. Shares are down 3.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Brinker International as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.1%. Since the same quarter one year prior, revenues slightly increased by 5.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $144.02 million or 28.08% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 14.07%.
  • BRINKER INTL INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BRINKER INTL INC increased its bottom line by earning $3.07 versus $2.25 in the prior year. This year, the market expects an improvement in earnings ($3.55 versus $3.07).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Hotels, Restaurants & Leisure industry average, but is greater than that of the S&P 500. The net income has decreased by 12.1% when compared to the same quarter one year ago, dropping from $65.43 million to $57.50 million.
  • The gross profit margin for BRINKER INTL INC is rather low; currently it is at 19.32%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.97% trails that of the industry average.

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