BRINKER INTERNATIONAL, INC. (EAT): what the price requires
At today's price, BRINKER INTERNATIONAL, INC. (EAT) is priced for +11.9% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/EAT
Headline
| Field | Value |
|---|---|
| Ticker | EAT |
| Company | BRINKER INTERNATIONAL, INC. |
| Current price | $187.53/sh |
| Composition | Chili's 91% / Maggiano's 9% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 3.6% |
| Operating margin today | 10.7% |
| Margin compression implied | -7.1pp |
| Implied growth | 11.9% |
| Multiple paid | 18x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.5pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.18σ |
| cohort percentile (of 212 peers) | 48 |
| sustained it ~5 years at this level | 51% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.33x | 4 | expensive |
| Earnings | 2.22x | 5 | expensive |
| Relative | 0.52x | 5 | justifies |
| Growth | 0.71x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.7%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $384.54 | 0.49x | yes | FCF base $0.5B, growth 12% (input: historical growth), terminal g 4.0%, WACC 7.7%, 6yr projection |
| DCF Exit Multiple | Growth | $265.26 | 0.71x | yes | Exit EV/EBITDA: 14.9x / 16.9x / 18.9x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $265.08 | 0.71x | yes | P/E 28x (static sector reference · 2026-04), scenarios: 23.2x / 28.0x / 32.8x (bear / base = reference held flat / bull), EV/EBITDA 18x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $112.46 | 1.67x | yes | BV/sh $9.12, ROE (TTM) 114.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $979.91 | 0.19x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $174.64 | 1.07x | yes | Rev $5.7B, growth 12% (input: historical growth; tapered), Terminal P/S: 1.2x / 1.5x / 1.7x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $357.35 | 0.52x | yes | EPS $10.21, growth 35% (input: historical EPS growth), PEG=0.52 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $37.14 | 5.05x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.33B × (1−21%) / WACC 7.7% → EPV (no growth) |
| Residual Income | Asset | $190.86 | 0.98x | yes | BV $9.12 + 5yr PV of (ROE (TTM) 114.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $45.78 | 4.10x | yes | √(22.5 × EPS $10.21 × BVPS $9.12) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $202.84 | 0.92x | yes | EBITDA $0.60B × sector EV/EBITDA 18.0x |
| FCF Yield | Earnings | $84.46 | 2.22x | yes | FCF $504.4M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $76.62 | 2.45x | yes | SBC-adj FCF $0.47B (FCF $0.50B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $329.44 | 0.57x | yes | EPS $10.21 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $7.40 | 25.34x | yes | BV $9.12 × (ROIC 6.3% / WACC 7.7%) (excluded from median) |
| P/Sales Sector | Relative | $579.79 | 0.32x | yes | Revenue $5.73B × sector P/S 4.5x |
| PEG Fair Value | Relative | $382.88 | 0.49x | yes | EPS $10.21 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $110.38 | 1.70x | yes | EPS $10.21 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $498.3m |
| Net debt / NOPAT (after-tax) | 1.03x |
| Net debt / operating income (pre-tax) | 0.82x |
| Interest coverage | 13.7x |
| Share count CAGR (buyback) | -0.3% |
| Burning cash | no |
Bullet Takeaways
Brinker's Chili's brand (about 91% of the business) delivered its 20th consecutive quarter of same-store sales growth, up 4% in fiscal Q3 2026 while lapping a 31% prior-year comp, with February and March comps both up 5.9% on positive traffic.
The growth is high-quality and flows through: Chili's beat the casual-dining industry by 420 basis points, a new chicken-sandwich platform showed early sales up 161%, adjusted EPS of $2.90 beat estimates, and management raised full-year guidance to $10.60 to $10.85.
Bull Case
The direction of Brinker's numbers is the bull case, and the trajectory has been remarkable. Chili's, which is about 91% of the company, just delivered its 20th consecutive quarter of same-store sales growth, up 4% in fiscal Q3 2026, and it did so while lapping a 31% comp from the prior year, which is one of the hardest comparisons in all of restaurants. The turnaround is visible in the multi-year segment data: Chili's company sales grew from roughly $3.6 billion in fiscal 2023 to $4.8 billion in fiscal 2025 [EAT FY2025 10-K, accession 0000703351-25-000035]. That is not a stabilization story; it is a brand that has reaccelerated, and the momentum is still building, with February and March Chili's comps both up 5.9% on positive traffic.
The quality of that growth is what makes it durable. Chili's is winning on traffic, not just price, and it exceeded the casual-dining industry by 420 basis points in the quarter, meaning it is taking share, not just riding a category tide. New menu innovation is driving it, with a chicken-sandwich platform showing early sales up 161% versus pre-launch levels. Traffic-led, share-gaining comps backed by successful product launches are exactly the kind of growth that compounds, because they expand the customer base rather than just the check.
That operating momentum flows to the bottom line and to the valuation. Fiscal Q3 adjusted diluted EPS of $2.90 beat the $2.87 estimate, company sales rose to $1,455.5 million, and management raised full-year fiscal 2026 guidance to revenue of $5.78 to $5.82 billion and adjusted EPS of $10.60 to $10.85. A brand comping positively for five straight years, gaining share, innovating successfully, and raising guidance is being priced for a reasonable continuation, not a heroic one.
Bear Case
The fragile part of the Brinker thesis is its dependence on Chili's momentum continuing, and that momentum is now lapping extraordinary numbers. The single most demanding assumption baked into the price is that Chili's keeps comping positively after a 31% prior-year comp. A 4% comp on top of 31% is impressive, but it also means the easy gains from the turnaround are behind the company, and the comparisons only get harder from here. The whole valuation rests on the brand sustaining traffic growth into ever-tougher laps, and any quarter where Chili's comps flatten or turn negative would challenge the narrative directly, because there is no second growth engine to lean on: Maggiano's, the other 9% of the business, actually saw comparable sales fall 4.6% in the quarter.
The second fragile assumption is margin durability against a soft consumer. Casual dining is among the first categories to feel a middle-income pullback, and Brinker carries real fixed costs in labor and leases, with a roughly 10.4% operating margin that leaves limited cushion. The Q3 call flagged margin pressures alongside the strong revenue, a reminder that comping on traffic and value can come at the cost of profitability if input and labor costs rise faster than price. A brand that wins on value is also a brand exposed if it has to keep discounting to hold traffic.
The valuation reflects how much of the recovery is already priced. The earnings-power method, which capitalizes normalized earnings with no growth, says the stock is expensive, and the price is justified mainly by the methods that assume the growth continues. Net debt of about $2.6 billion adds leverage to a cyclical, thin-margin business, magnifying any operating wobble. The bear case is not that Chili's is a broken brand; it plainly is not. It is that the price embeds a continuation of a turnaround that has already delivered its biggest gains, against tougher comparisons, a single dominant brand with no backup, and a consumer that could soften, leaving little room if the momentum that drove the story finally decelerates.
Valuation
Brinker is a value-and-asset-supported name where the price leans on the Chili's turnaround continuing. At $164.40 the inversion prices the business at roughly 15.9 times operating income and reads the priced-in assumption as within range, implying about 7.8% operating-profit growth, a pace the recent comps have exceeded but which gets harder to sustain as the laps toughen.
The method families split in an informative way. The price is supported by asset-based, relative-multiple, and growth-DCF value, while the earnings-power method says expensive. The relative method is notably below the price in the X-ray's lower readings, and the growth methods reach higher, which is consistent with a brand whose recent results justify a premium to its no-growth earnings power. The earnings-power frame saying expensive is the caution flag: it means that if the growth stops, the static value of the business is below the price.
The practical read is a recovering casual-dining operator priced for the recovery to hold, not to accelerate. The momentum is real (20 straight quarters of Chili's comps, 420 basis points of industry outperformance, raised guidance to $10.60 to $10.85 EPS), and the asset and growth methods support the price on that basis. But the buyer is underwriting continued positive comps against 31% prior-year laps, with margin pressure in a thin-margin business and about $2.6 billion of net debt. The valuation is reasonable if Chili's keeps gaining share and comping positively, and full to expensive on the earnings-power frame if the turnaround momentum fades against the tougher comparisons.
Catalysts
The most recent catalyst was the fiscal Q3 2026 report on April 29, which beat and raised. Company sales rose to $1,455.5 million from $1,413.0 million a year earlier, adjusted diluted EPS of $2.90 edged the $2.87 estimate, and the stock rose on the print. The headline was Chili's, which posted its 20th consecutive quarter of same-restaurant sales growth, up 4% while lapping a 31% prior-year comp, with company comparable sales up 3.3% overall (Chili's up 4.0%, Maggiano's down 4.6%). Chili's exceeded the casual-dining industry by 420 basis points, and February and March comps were both up 5.9% on positive traffic. Management raised fiscal 2026 guidance to revenue of $5.78 to $5.82 billion and adjusted EPS of $10.60 to $10.85.
Menu innovation and traffic are the forward operating catalysts. The new chicken-sandwich platform showed early sales up 161% versus pre-launch levels, and continued product launches plus value-driven marketing are what sustain the traffic-led comps. The key items to track are whether Chili's can keep comping positively against the increasingly difficult prior-year comparisons, the trajectory of traffic, and whether margin holds as the company invests in value.
The risks to watch are the consumer and the single-brand concentration. Casual dining is sensitive to middle-income spending, so any pullback would pressure traffic, and Maggiano's continued comp decline shows there is no second engine to offset a Chili's slowdown. Margin pressure flagged on the Q3 call, the roughly $2.6 billion net-debt load, and the difficulty of lapping a 31% comp are the swing factors. The next quarterly comp print is the clearest near-term signal of whether the turnaround momentum is intact.
Sources: https://www.prnewswire.com/news-releases/brinker-international-reports-third-quarter-of-fiscal-2026-results-and-updates-fiscal-2026-guidance-302756567.html , https://www.investing.com/news/transcripts/earnings-call-transcript-brinker-beats-q3-2026-eps-forecast-stock-rises-93CH-4645785 , https://www.gurufocus.com/news/8830950/brinker-international-inc-eat-q3-2026-earnings-call-highlights-strong-revenue-growth-amidst-margin-pressures , https://investors.brinker.com/news/news-details/2026/BRINKER-INTERNATIONAL-REPORTS-THIRD-QUARTER-OF-FISCAL-2026-RESULTS-AND-UPDATES-FISCAL-2026-GUIDANCE/default.aspx
Peer Cohorts (Per Segment, With Filing Citations)
Chili's (reported)
- TXRH (Texas Roadhouse, Inc.)
- FY2025 10-K: …30 years of media, public relations, and industry experience. L. Paul Marshall. Mr. Marshall is Chief Growth Officer of the Company, having been appointed to this position in August 2025. In this role, he leads the Bubba's 33 concept while also supporting the oversight of the construction, design, real estate,…
- FY2025 10-K: …segment of consumers seeking high quality, affordable meals served with friendly, attentive service. This strategy guides our purpose statement of "Serving Communities Across America and the World." Restaurant Concepts As of December 30, 2025, we owned and operated 714 restaurants and franchised an additional 102…
- DRI (DARDEN RESTAURANTS, INC.)
- FY2025 10-K: …Cheddar's Scratch Kitchen, Chuy's, Yard House, Bahama Breeze, Seasons 52, The Capital Burger and ongoing royalties and other fees from our franchise operations and contractually managed locations). External sales are derived principally from food and beverage sales, we do not rely on any major customers as a source…
- FY2025 10-K: …person was approximately $19.00, with alcoholic beverages accounting for 7.0 percent of Cheddar's Scratch Kitchen's sales. Cheddar's Scratch Kitchen features different menus across its trade areas to reflect geographic differences in consumer preferences, prices and selections, as well as a smaller portioned,…
- CAKE (THE CHEESECAKE FACTORY INCORPORATED)
- FY2025 10-K: …experience at moderate prices by offering an extensive, innovative and evolving menu in an upscale casual, high-energy setting with attentive, efficient and friendly service. As a result, The Cheesecake Factory restaurants appeal to a diverse customer base across a broad demographic range. Our extensive menu and…
- FY2025 10-K: …below.) Distinctive Restaurant Design and Decor. We place significant emphasis on the contemporary interior design and decor of our restaurants, which create a high-energy ambiance in a casual setting and contribute to the distinctive dining experience enjoyed by our customers. We have evolved our restaurants' design…
Maggiano's (reported)
- DRI (DARDEN RESTAURANTS, INC.)
- FY2025 10-K: …Cheddar's Scratch Kitchen, Chuy's, Yard House, Bahama Breeze, Seasons 52, The Capital Burger and ongoing royalties and other fees from our franchise operations and contractually managed locations). External sales are derived principally from food and beverage sales, we do not rely on any major customers as a source…
- FY2025 10-K: …culinary innovation, attentive service, and engaging atmosphere enabled by our people. Darden enables each brand to reach its full potential by leveraging its scale, insights, and experience in a way that protects uniqueness and competitive advantages. Additionally, our brands can capitalize on data driven insights…
- CAKE (THE CHEESECAKE FACTORY INCORPORATED)
- FY2025 10-K: …by 0.1%, or $2.2 million, from fiscal 2024. The increase from fiscal 2024 was primarily driven by an increase in average check of 2.4% (based on an increase of 4.3% in menu pricing, partially offset by a 1.9% negative change from menu mix), partially offset by decreased customer traffic of 2.3%. We implemented menu…
- FY2025 10-K: …with strong national reception of the North Italia concept to-date, we believe there is potential for approximately 200 domestic locations over time, which supports our plan for approximately 20% average annual unit growth. Average sales per location open for the full year for North Italia restaurants were…
- TXRH (Texas Roadhouse, Inc.)
- FY2025 10-K: …segment of consumers seeking high quality, affordable meals served with friendly, attentive service. This strategy guides our purpose statement of "Serving Communities Across America and the World." Restaurant Concepts As of December 30, 2025, we owned and operated 714 restaurants and franchised an additional 102…
- FY2025 10-K: 's 33 restaurants, and one Jaggers restaurant. In 2025, we had store week growth of approximately 5.0% across all concepts, including a benefit from franchise acquisitions in 2025, offset by lapping the impact of the additional week in 2024. In 2026, we expect store week growth of 5% to 6% across all concepts,…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.