Trade-Ideas LLC identified Brinker International ( EAT) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) 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 $70.4 million.
  • EAT has traded 1.6 million shares today.
  • EAT traded in a range 216.7% of the normal price range with a price range of $2.53.
  • EAT traded below its daily resistance level (quality: 425 days, meaning that the stock is crossing a resistance level set by the last 425 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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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 2.5%. EAT has a PE ratio of 17. Currently there are 7 analysts that rate Brinker International a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Brinker International has been 1.2 million shares per day over the past 30 days. Brinker International has a market cap of $3.0 billion and is part of the services sector and leisure industry. The stock has a beta of 1.10 and a short float of 11.6% with 4.69 days to cover. Shares are down 12.1% year-to-date as of the close of trading on Monday.

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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, good cash flow from operations, impressive record of earnings per share growth and compelling growth in net income. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • EAT's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 0.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BRINKER INTL INC reported significant earnings per share improvement 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 $3.07 versus $2.25 in the prior year. This year, the market expects an improvement in earnings ($3.60 versus $3.07).
  • 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 98.5% when compared to the same quarter one year prior, rising from $28.82 million to $57.22 million.
  • Net operating cash flow has increased to $93.70 million or 13.24% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.90%.
  • The gross profit margin for BRINKER INTL INC is rather low; currently it is at 21.23%. 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 7.48% trails the industry average.

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