Here’s why Brinker International shares are down today

Restaurant Company Shares Brinker International (EAT -11.05%) — the parent of Chili’s and Maggiano’s Little Italy — sank Wednesday after reporting financial results for the fourth quarter of fiscal 2024. As of noon ET today, Brinker’s stock was down about 13%.

Down with good results

Brinker’s fourth quarter ended in late June, and traffic to its restaurants during that time was surprisingly strong. A nearly 6 percent year-over-year increase, along with price increases, led to a 13.5 percent increase in same-store sales in the fourth quarter. That helped lift full-year revenue to $4.4 billion, up nearly 7% from fiscal 2023.

On an adjusted basis, full-year diluted earnings per share (EPS) of $4.10 were less than analysts expected. Moreover, management expects adjusted diluted EPS of $4.75, at most, in fiscal 2025, which is also lower than expectations.

The lack of expectations results in a lower stock price today for Brinker, even though the numbers were good by almost any measure.

what now

It’s important to note that going into the fourth quarter report, Brinker stock was already up about 60% year-to-date, which was well ahead of S&P 500. At the end of the day, this is a modestly growing, more mature business.

In other words, we wouldn’t expect such strong gains for stocks. So it’s no surprise to see it cool down a bit today in light of its recent run.

As of this writing, Brinker shares are trading at about 13 times forward adjusted earnings expectations. I think that’s reasonable. If the company can continue to drive stronger restaurant traffic, then this stock could find more upside in the coming quarters and years. But investors should be aware that they won’t always enjoy higher earnings from charging higher menu prices, as they did in fiscal 2024.