Brinker International (EAT) Flagged As Strong On High Volume

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Brinker International ( EAT) as a strong on high 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 $47.8 million.
  • EAT has traded 221,455 shares today.
  • EAT is trading at 8.90 times the normal volume for the stock at this time of day.
  • EAT is trading at a new high 3.01% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. 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. 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. owns, develops, operates, and franchises casual dining restaurants under the Chili's Grill & Bar and Maggiano's Little Italy brands worldwide. As of September 24, 2014, it owned, operated, or franchised 1,622 restaurants. The stock currently has a dividend yield of 1.9%. EAT has a PE ratio of 23. Currently there are 6 analysts that rate Brinker International a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Brinker International has been 1.1 million shares per day over the past 30 days. Brinker International has a market cap of $3.6 billion and is part of the services sector and leisure industry. The stock has a beta of 1.02 and a short float of 14.9% with 10.55 days to cover. Shares are down 0.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Brinker International as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 3.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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 24.4% 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 $2.25 versus $2.21 in the prior year. This year, the market expects an improvement in earnings ($3.10 versus $2.25).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 16.3% when compared to the same quarter one year prior, going from $56.26 million to $65.43 million.
  • The gross profit margin for BRINKER INTL INC is rather low; currently it is at 21.24%. Regardless of EAT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.34% trails the industry average.

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