Shares of Brinker (EAT) - Get Free Report were falling over 5% to $45 in pre-market trading on Wednesday after the Chili's parent company reported fiscal 2017 second-quarter earnings and revenue below estimates and lowered its full-year outlook.
Before the market open, the Dallas-based company said adjusted earnings declined 9% year-over-year to 71 cents a share while revenue decreased 2.2% to $771 million. Analysts surveyed by FactSet were modeling adjusted earnings of 74 cents a share on $786 million in revenue.
Total same-restaurant sales were down 2.9%. Same-restaurant sales at company-owned Chili's restaurants dropped 3.3%, and same-restaurant sales at Maggiano's locations were down 0.8%.
"We are not satisfied with our second-quarter results," CEO Wyman Roberts said in a statement. "While we believe our initiatives can deliver share gains, our overall performance was hurt by a much weaker-than-expected casual dining category."
Though Brinker has been pegged by TheStreet as a potential target for either activists investors or a take-over, Maxim Group LLC analyst Stephen Anderson, has yet to change his view on the company.
The company's shares have "additional support from [the TKdate] announcement that Golden Gate Capital would purchase the restaurant business of Bob Evans Farms (BOBE) .," the analyst said in an email. "In my view, this should [place] a floor on EAT's share price."
Bob Evans said Tuesday that it would sell its restaurants business should create a floor on Brinker stock, Maxim Group LLC analyst Stephen Anderson said in an email.
Brinker trades at about 7.8 times enterprise value to Ebitda, whereas Bob Evans trades at 22.8 times 9.9 times enterprise value to Ebitda, according to FactSet data.
Brinker also has a relationship with Golden Gate Capital.
Brinker sold Romano's Macaroni Grill to the private equity firm for $131.5 million in 2008 and On The Border Mexican Grill & Cantina to the firm for $180 million in 2010.
For the full year, Brinker now expects to report adjusted earnings between $3.05 and $3.15 per share and a revenue decline between 2% and 2.5% from the $3.26 billion reported for fiscal 2016.
Brinker had previously guided for adjusted earnings between $3.40 and $3.50 per share and a revenue decline between 0.5% and 1%.
FactSet analysts are looking for full-year earnings of $3.36 a share on revenue of $3.21 billion.
Brinker anticipates same-restaurant sales to be down 1.5% to 2% for the year, while FactSet analysts are projecting them to be flat.