Brinker International, Inc., together with its subsidiaries, engages in the ownership, development, operation, and franchising of casual dining restaurants in the United States and internationally. It operates and franchises Chili's Grill & Bar and Maggiano's Little Italy restaurant brands. The company also operates virtual brands, It's Just Wings. Brinker International, Inc. was founded in 1975 and is headquartered in Dallas, Texas.

Brinker International looks operationally strong, but in terms of valuation the market is already pricing in a significant portion of the success. A P/E of 13.98 is 23.5% below the industry median, which supports the case for reasonable earnings per share; however, a P/S of 1.13 is 66.2% above the median, P/B of 24.14 is more than 13 times higher, and P/FCF of 17.98 is also above the industry benchmark, so by valuation multiples the picture does not look cheap. The combination of a very high P/B with weak liquidity is especially concerning: the quick ratio is 0.00, the current ratio is only 0.40, meaning the short-term cushion is weak. The debt burden is also higher than the industry’s: debt/equity is 1.04 and long-term debt is $420 million relative to a comparatively small capital base, which increases sensitivity to any deterioration in the operating cycle. On the other hand, the company’s profitability is outstanding: ROE of 124.09, ROA of 17.67, and ROI of 55.77 are all significantly above the median, while operating and net margins are also above industry levels. The year-over-year trend is generally positive: revenue, EBITDA, operating profit, and net income are growing, and margins remain stable, confirming the quality of the current business. At the same time, gross margin of around 18.65% is below the industry median, so part of the efficiency is achieved not at the gross margin level, but through expense management and operating leverage. Equity and assets are increasing, which supports fundamental resilience, but the absolute amount of cash on hand remains modest relative to liabilities. The dividend yield of 1.25% is present, but it is not a key driver of revaluation and does not offset balance sheet risks. Overall, the fundamentals support the current elevated valuation more than they provide a strong argument for further expansion. For an investor, this means upside potential remains thanks to strong earnings and improving operating metrics, but room for additional upside is limited by expensive multiples and weak liquidity. Therefore, a moderate conservative downward adjustment to the forecast is more appropriate than an aggressive increase.

Brinker International, Inc.

Strong profitability and revenue growth support EAT, but expensive valuation multiples, weak liquidity, and elevated debt limit the upside.

A month has gone by since the last earnings report for Brinker International (EAT). Shares have lost about 10% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Brinker International due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Brinker International, Inc. before we dive into how investors and analysts have reacted as of late.
Brinker Q4 Earnings Meet Estimates, Revenues Beat on Chili's Growth
Brinker reported fourth-quarter fiscal 2026 results, with earnings in line with the Zacks Consensus Estimate while revenues surpassed the same. Both the top and bottom lines increased on a year-over-year basis.
In the quarter under review, Brinker reported adjusted earnings per share (EPS) of $3.07, up 23.3% year over year and in line with the Zacks Consensus Estimate.
Total revenues rose 5.1% year over year to $1.54 billion and beat the consensus mark by 0.4%.
The quarter benefited from sustained momentum at Chili’s, supported by positive traffic, menu pricing, strong everyday value, the Big Crispy launch and continued operational improvements. However, results were partly pressured by weaker traffic and restaurant closures at Maggiano’s, along with higher commodity, advertising and insurance costs.
EAT's Chili's Momentum Extends in Q4
Chili’s total revenues increased 6.2% year over year to $1.423 billion. Company sales rose 6.2% to $1.409 billion, while franchise revenues advanced 12.5% to $14.4 million. The brand continued to benefit from its value platform and menu innovation.
Comparable restaurant sales for Chili's increased 5.6% year over year, reflecting 4.3% pricing and 1.5% traffic growth, partly offset by a 0.2% negative mix impact. Management said the Big Crispy chicken sandwich helped sustain momentum, with sales rising to 55 sandwiches per restaurant per day by quarter-end from 20 before the launch.
Brinker's Maggiano's Trends Remain Challenged
Maggiano’s total revenues declined 7.8% year over year to $112.8 million. Company sales also fell 7.8% to $112.6 million, reflecting lower traffic and restaurant closures, partly offset by menu pricing.
Comparable restaurant sales decreased 2.5%. Traffic dropped 5.3% and mix was down 0.1%, while price contributed 2.9%. The brand’s non-GAAP restaurant operating margin contracted to 10.3% from 13.3%. Management said the turnaround is progressing more slowly than planned and modeled flat revenues and profits for fiscal 2027.
EAT's Q4 Margins Expand Despite Food Inflation
Operating income increased 17% year over year to $167 million, while operating income margin expanded 110 basis points to 10.9%. Non-GAAP restaurant operating margin improved 20 basis points to 18% of company sales. Net income rose 22.5% to $131.1 million, and GAAP earnings advanced to $2.99 from $2.30. Adjusted EBITDA increased 7.2% to $227.6 million.
Food and beverage costs rose to 26.3% of company sales from 25.5%, pressured by 4.4% commodity inflation, mainly higher beef costs and a temporary spike in tomato prices. Restaurant labor improved 90 basis points to 31.3%, as sales leverage offset 3.1% wage inflation and other investments. Restaurant expenses edged down 10 basis points to 24.4%. Advertising expense was 3% of sales, up 20 basis points, supporting the Big Crispy campaign.
Brinker's Cash Flow Supports Capital Returns
For fiscal 2026, net cash provided by operating activities rose 16.3% year over year to $789.4 million. Cash and cash equivalents ended the year at $110 million compared with $18.9 million a year earlier. Payments for property and equipment totaled $231.9 million.
Brinker used operating cash flow to repurchase $400 million of common stock during fiscal 2026. The board subsequently authorized total repurchase capacity of $750 million. After year-end, the company redeemed $350 million of 8.25% notes using its revolving credit facility, which management expects to generate interest savings in fiscal 2027. Brinker also plans to acquire 12 Chili’s franchise restaurants in Alabama and Mississippi.
EAT's FY27 Outlook Targets Continued Growth
For fiscal 2027, EAT expects total revenues of $6.15-$6.27 billion and adjusted earnings of $12.60-$13.40 per share. Capital expenditures are projected at $265-$285 million, with diluted weighted average shares of 42-43 million. The company plans 60-80 Chili’s reimages after completing 11 in fiscal 2026.
The outlook includes a 53rd operating week, which is expected to add about 2% to revenues and $0.70 to adjusted earnings per share. Management assumes low-single-digit commodity and wage inflation and three net new company-owned restaurant openings. For Chili’s, the plan assumes mid-single-digit same-store sales growth and positive traffic for the remainder of the year, along with 20-40 basis points of restaurant-level margin improvement on a 52-week basis.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted 13.04% due to these changes.
VGM Scores
Currently, Brinker International has a strong Growth Score of A, a score with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Brinker International has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Brinker International is part of the Zacks Retail - Restaurants industry. Over the past month, Chipotle Mexican Grill (CMG), a stock from the same industry, has gained 10.8%. The company reported its results for the quarter ended June 2026 more than a month ago.
Chipotle reported revenues of $3.35 billion in the last reported quarter, representing a year-over-year change of +9.3%. EPS of $0.33 for the same period compares with $0.33 a year ago.
Chipotle is expected to post earnings of $0.29 per share for the current quarter, representing no change from the year-ago quarter. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Chipotle. Also, the stock has a VGM Score of C.
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Brinker International (EAT) Down 10% Since Last Earnings Report: Can It Rebound?

Key Points
It will be one of the index's 600 components.
While that changes nothing fundamental about the company, it does increase its visibility.
Oil refining company Delek US Holdings (NYSE: DK) took a turn in the investor spotlight Tuesday. Its equity is soon to become a component of a noted small-cap stock index, and that increased visibility is already making the company more popular. It closed the day more than 5% higher.
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Among these is Delek's ascension to the S&P SmallCap 600 index, as part of a group of incoming stocks that includes titles as varied as Boston Beer, The Trade Desk, and Capri Holdings.
The new class displaces from the index such companies as Brinker International -- "graduating" to the S&P MidCap 400 index -- and Cogent Communications.
These changes will become effective prior to market open on Monday, Sept. 21.
Consider buying, but not for the immediate reason
Far more often than not, the price of a stock newly included in a well-known index sees a quick pop following the announcement. That's mainly because it instantly becomes a candidate for inclusion in the portfolios of index funds that constantly trawl instruments like the S&P SmallCap 600 index and its ilk. The increased visibility as an S&P index component doesn't hurt either.
We should bear firmly in mind that such inclusion changes little or nothing about a company's fundamentals. That being said, I feel Delek stock has upside potential, especially given the current state of its small refinery exemptions.
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Why Delek Holdings Stock Triumphed on Tuesday

Brinker International, Inc. EAT demonstrated resilience in fiscal 2026, expanding profitability despite persistent inflationary pressures. The company reported fiscal fourth-quarter restaurant operating margins of 18%, up 20 basis points year over year. Sales leverage was the primary driver, helping offset higher food, advertising and insurance costs. Food and beverage expenses increased 80 basis points amid 4.4% commodity inflation, while labor costs benefited from strong sales growth despite roughly 3.1% wage inflation.
The momentum was particularly notable at Chili’s. Fiscal fourth-quarter comparable sales increased 5.6%, supported by 1.5% traffic growth. Management also said July sales and traffic accelerated meaningfully, suggesting the brand entered fiscal 2027 with solid momentum. The Big Crispy Chicken Sandwich, everyday value offerings and operational improvements are helping attract and retain guests.
There could be further room for margin expansion. Management expects 20-40 basis points of restaurant-level margin improvement on a 52-week basis in fiscal 2027, potentially reaching 50 basis points with the benefit of the 53rd week. Importantly, the company has built relatively conservative inflation assumptions into its outlook, leaving potential upside if sales outperform or costs moderate.
EAT also believes its restaurants retain capacity to accommodate more traffic, while higher average unit volumes could support additional leverage. However, management plans to reinvest part of the gains into guest experience rather than maximize near-term flow-through.
With fiscal 2027 guidance of $12.60-$13.40 per share and continued sales momentum, EAT appears positioned for further earnings growth if execution remains strong.
Darden and Texas Roadhouse Also Show Margin Resilience
Darden Restaurants DRI and Texas Roadhouse TXRH are two notable casual-dining peers that provide useful benchmarks for Brinker as investors assess margin expansion amid inflation. The company’s diversified portfolio and scale provide an advantage in managing labor, food and operating costs. Darden’s trailing operating margin stood at about 12.2%, above EAT’s 10.8%, highlighting its strong profitability profile.
Texas Roadhouse, meanwhile, has demonstrated resilience despite exposure to beef and other commodity costs. With an operating margin of about 7.9%, Texas Roadhouse’s revenue growth remained strong, reflecting continued consumer demand.
For EAT, the key differentiator is its improving margin trajectory. Management expects restaurant-level margin expansion in fiscal 2027 despite incorporating low-single-digit commodity and wage inflation. If sales momentum remains strong and inflation eases faster than anticipated, EAT could potentially outperform its margin outlook.
EAT’s Price Performance, Valuation and Estimates
Brinker’s shares have gained 67.4% over the past six months, against the industry’s 11.7% decrease.
In terms of its forward 12-month price-to-earnings ratio, EAT is trading at 17.25, down from the industry average of 22.14.
P/E (F12M)
Over the past 30 days, the Zacks Consensus Estimate for EAT’s fiscal 2026 earnings per share has increased, as shown in the chart.
EAT currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Brinker Expands Margins Despite Inflation: Is More Upside Ahead?

In the equity market, investments need to be prudently hedged to overcome uncertainties and limit losses related to external shocks. A question that often arises is whether one should resort to a value strategy that seeks discounted stocks or opt for growth investing in times of extreme market instability.
The investing track of the Oracle of Omaha over the past few decades and his gradual shift from being a pure-play value investor to a GARP (growth at a reasonable price) investor might give us all the answers.
Per the GARP theory, the strategic mingling of growth and value-investing principles gives us a hybrid strategy, offering an ideal investment by utilizing the best features of both. What GARPers look for is whether or not the stocks are somewhat undervalued and have solid, sustainable growth potential (Investopedia).
Several stocks that have surged significantly in recent years have demonstrated the overwhelming success of this hybrid investing strategy over pure-play value and growth investments. Here, we will discuss the success of four such stocks. These are Brinker International EAT, Dollar Tree DLTR, Halozyme Therapeutics HALO and CACI International CACI.
A Few More Words on GARP
GARP investing gives priority to one of the popular value metrics, the price/earnings growth (PEG) ratio. Although it is categorized under value investing, this strategy follows the principles of both growth and value investing.
The PEG ratio is defined as (Price/ Earnings)/Earnings Growth Rate
It relates the stocks’ P/E ratios to the future earnings growth rates.
While P/E alone gives an idea of stocks that are trading at a discount, PEG, the addition of the growth element to it, helps identify stocks with solid future potential.
A lower PEG ratio, preferably less than 1, is always better for GARP investors.
For example, if a stock's P/E ratio is 10 and the expected long-term growth rate is 15%, the company's PEG will come down to 0.66, a ratio indicating both undervaluation and future growth potential.
Unfortunately, this ratio is often neglected due to investors' limitations in calculating the future earnings growth rate of a stock.
There are some drawbacks to using the PEG ratio, though. It does not consider the very common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.
Hence, PEG-based investing can be even more rewarding if some other relevant parameters are also taken into consideration.
Here are the screening criteria for a winning strategy:
PEG Ratio Less Than X Industry Median
P/E Ratio (using F1) less than X Industry Median (For more accurate valuation purposes)
Zacks Rank of 1 (Strong Buy) or 2 (Buy) (Whether good market conditions or bad, stocks with a Zacks Rank #1 or #2 have a proven history of success.)
Market Capitalization greater than $1 Billion (This helps us focus on companies that have strong liquidity.)
Average 20-Day Volume greater than 50,000: A substantial trading volume ensures that the stock is easily tradable.
Percentage Change F1 Earnings Estimate Revisions (4 Weeks) greater than 5%: Upward estimate revisions add to the optimism, suggesting further bullishness.
Value Score of less than or equal to B: Our research shows that stocks with a Value Style Score of A or B, when combined with a Zacks Rank #1, 2 or 3 (Hold), offer the best upside potential.
Growth Score of less than or equal to B: Our research shows that stocks with a Growth Style Score of A or B, when combined with a Zacks Rank #1, 2 or 3, offer the best upside potential.
Our PEG-Driven Picks
Here are four stocks that qualified the screening:
Brinker: This company operates Chili’s Grill & Bar and Maggiano’s Little Italy, offering casual dining across U.S. and international markets. Chili’s focuses on burgers, fajitas, ribs and value offerings, while Maggiano’s serves Italian-American cuisine, including pasta, seafood and steaks, with banquet facilities at most locations.
EAT can be an impressive GARP investment pick with its Zacks Rank #2, a Value Score of B and a Growth Score of A. Apart from a discounted PEG and P/E, the stock has an impressive long-term expected growth rate of 14.6%.
Dollar Tree: Headquartered in Chesapeake, VA, Dollar Tree operates discount variety stores offering everyday consumables and discretionary merchandise across the United States and Canada. Its Dollar Tree banner features a growing multi-price format, while DollarTree.com provides bulk merchandise online and supports store traffic through promotions, events and seasonal offerings.
DLTR carries a Zacks Rank #2 at present, along with a Value Score of A and a Growth Score of A. Dollar Tree also has an impressive five-year expected growth rate of 13.6%.
Halozyme: San Diego, CA-based Halozyme develops and commercializes oncology treatments while licensing its ENHANZE drug-delivery technology for subcutaneous formulations. The company earns most revenues from royalties on partnered drugs. Royalties exceeded 55% of 2025 revenues. Total revenues reached $1.39 billion, up 38% year over year.
Halozyme stock can be an impressive GARP investment pick with its Zacks Rank #2, a Value Score of B and a Growth Score of A. Apart from a discounted PEG and P/E, HALO has an impressive long-term historical growth rate of 37.3%.
CACI International: Based in Reston, VA, CACI International provides IT, cybersecurity, intelligence and mission-support solutions to defense, intelligence, federal civilian and commercial customers. Its domestic operations span enterprise IT, data management, C4ISR, cybersecurity and systems engineering, while international operations serve government and commercial clients; fiscal 2026 revenues totaled $9.57 billion.
CACI can also be an impressive GARP investment pick with its Zacks Rank #2, a Value Score of B and a Growth Score of B. Apart from a discounted PEG and P/E, the stock also has a solid long-term expected growth rate of 10.6%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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4 High-Growth GARP Stocks With Discounted PEG Ratios for 2026

For Immediate Release
Chicago, IL – September 4, 2026 – Stocks in this week’s article are Fortinet FTNT, Brinker International EAT, Lincoln Electric LECO and Lam Research LRCX.
4 GARP Stocks Investors Can Scoop Up for Maximum Returns
If you are looking for a profitable portfolio of stocks offering the best of value and growth investing, you can try the growth at a reasonable price or GARP strategy.
The strategy helps investors gain exposure to undervalued stocks with impressive prospects. Unlike a blend strategy, a portfolio that uses GARP investing is expected to include stocks that offer the best of value and growth investing. Fortinet, Brinker International, Lincoln Electric and Lam Research are some GARP stocks that hold promise.
GARP Metrics: Mix of Growth & Value Metrics
The GARP strategy seeks to offer an ideal investment by utilizing the best features of value and growth investing. Investors adopting the GARP approach prefer buying stocks priced below the market or any reasonable target determined by fundamental analysis. These stocks also have solid prospects in terms of cash flow, revenues, earnings per share (EPS) and so on.
Growth Metrics
A strong earnings growth history and impressive earnings prospects are the main concepts that GARP investors borrow from the growth investing strategy. However, instead of super-normal growth rates, pursuing stocks with a more stable and reasonable growth rate is a tactic of GARP investors. Hence, growth rates between 10% and 20% are considered ideal under the GARP strategy.
Another metric that growth and GARP investors consider is return on equity (ROE). GARP investors look for a strong and higher ROE than the industry average to identify superior stocks. Stocks with positive cash flows find precedence under the GARP plan.
Value Metrics
GARP investing prioritizes popular value metrics, the price-to-earnings (P/E) and price-to-book (P/B) ratios. Though this investing style picks stocks with higher P/E ratios than value investors, it avoids companies with extremely high P/E ratios.
Using the GARP principle, we ran a screen to identify stocks that should offer solid returns in the near term.
Here are four stocks from the 12 that made it through the screening process.
Fortinet's investment case rests on a broadening product portfolio and accelerating strategic momentum. The company raised its full-year 2026 revenue growth guidance to 19%, with full-year billings guided between $9.35 billion and $9.55 billion. The July 2026 launch of the FortiGate 1200G with FortiSASE Outpost introduces a convergent SASE Firewall architecture, a newly defined market opportunity addressing hybrid deployment demands.
Concurrently, the expanded FortiEndpoint platform consolidates AI visibility, data security, and endpoint protection into a single agent and license, deepening wallet share per customer. In August 2026, Fortinet acquired Virtue AI to enhance its Security Fabric with agentic AI runtime protection, directly addressing the fast-growing AI security segment. Fortinet Federal's CMMC Level 2 certification opens the U.S. government market.
The Zacks Consensus Estimate for FTNT's 2026 earnings has moved north by 8.3% to $3.40 per share in the past 60 days. This Zacks Rank #1 company surpassed the Zacks Consensus Estimate in all four trailing quarters, the average surprise being 20.34%.
Brinker International enters fiscal 2027 with a clear growth runway, underpinned by company-issued guidance targeting revenues of $6.15 billion to $6.27 billion and adjusted EPS of $12.60 to $13.40. Chili's brand momentum visibly accelerated in July 2026, powered by the sustained success of the Big Crispy chicken sandwich.
On July 16, the company redeemed $350 million in 8.25% notes, lowering its interest expense profile. Its board then expanded the share repurchase authorization to $750 million in August, reflecting management's confidence in free cash flow generation. A 60-to-80 restaurant reimage plan, mid-single-digit same-store sales guidance, and expected positive traffic at Chili's further support the outlook. An Investor Day set for Sept. 17, 2026 could serve as an additional near-term catalyst.
The Zacks Consensus Estimate for EAT's fiscal 2027 earnings has moved north by 4.8% to $13.01 per share in the past 60 days. This Zacks Rank #2 company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 6.21%.
Lincoln Electric is well-positioned for near-term outperformance, driven by converging demand and strategic catalysts. The company's RISE framework targets revenues exceeding $6 billion by 2030, peak adjusted operating margins above 20%, and mid-teens EPS CAGR. For the second half of 2026, management anticipates continued margin improvement, with mid-20% incremental operating margins and a neutral price-cost environment.
Improved demand and capital spending across the Americas and Asia Pacific are broadening the growth base. The July 2026 declaration by the board of a 79 cents per share quarterly dividend reinforces steady shareholder returns, while the company's scheduled September 2026 investor engagements signal management's confidence in execution. With 71 manufacturing facilities across 20 countries and proprietary automation capabilities, Lincoln Electric's infrastructure supports durable earnings growth.
The consensus estimate for LECO's 2026 earnings has moved north by 3% to $11.16 per share in the past 60 days. This Zacks Rank #2 company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 3.92%.
AI-driven semiconductor demand is structurally reshaping Lam Research's near-term growth outlook. The company's guidance for the September 2026 quarter projects revenues of $8.10 billion and a non-GAAP operating margin of 39.5%, reflecting strong sequential momentum. Deferred revenues of $2.43 billion at June quarter-end signal a healthy forward demand pipeline supporting continued execution.
In August 2026, Lam Research announced plans to invest more than $3 billion over the next five years to expand its global R&D lab network, with experiment capacity targeted to grow by over 50%. Groundbreaking of a new 120,000-square-foot Oregon facility marks the investment's first concrete milestone. A 27% quarterly dividend hike to $0.33 per share further signals management's confidence in sustained cash generation and long-term shareholder returns.
The consensus estimate for LRCX's 2026 earnings has moved north by 18.7% to $9.33 per share in the past 30 days. This Zacks Rank #2 company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 7.12%.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2984488/4-garp-stocks-that-investors-can-scoop-up-for-maximum-returns
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Zacks.com featured highlights include Fortinet, Brinker International, Lincoln Electric and Lam Research

Brinker International, Inc. EAT has delivered an impressive run, with shares advancing about 69.4% over the past three months. Over the same period, the industry and the S&P 500 have gained 1.3% and fallen 0.4%, respectively.
The sharp gain reflects improving fundamentals at its Chili’s business, where sustained traffic growth, successful menu launches and stronger restaurant economics have strengthened Brinker’s growth outlook. The company’s latest results suggest that the turnaround is gaining traction.
Notably, Brinker has outperformed peers such as Wingstop Inc. WING, Shake Shack Inc. SHAK and Domino's Pizza, Inc. DPZ during this period.
Chili’s Continues to Drive Growth
Chili’s remains the centerpiece of Brinker’s investment story. The brand generated 6% comparable-sales growth in the fourth quarter, marking its 21st consecutive quarter of same-store sales growth. The result was particularly impressive, as Chili’s delivered another solid increase after posting a strong 24% comparable-sales gain in the year-ago quarter. Over the past three years, Chili’s comparable sales have grown roughly 50%.
Traffic is becoming an increasingly important component of that growth. Fourth-quarter comparable sales increased 5.6%, driven by 1.5% traffic growth and 4.3% pricing, with a 0.2% negative mix impact. Management also noted that sales and traffic accelerated significantly in July and August, offering an encouraging start to fiscal 2027.
Chili’s focus on value is helping the brand attract consumers across income groups. Management noted that the average per-person spend at Chili’s remains $3-$4 below competitors, reinforcing its value positioning and helping generate a cycle of higher traffic, sales growth, margin improvement and reinvestment.
Big Crispy Strengthens the Brand
Menu innovation is another important growth driver. The Big Crispy Chicken Sandwich has significantly exceeded management’s initial expectations. Daily sales climbed from around 20 sandwiches per restaurant before its launch to 55 by the end of the fourth quarter, representing a 175% increase. Management said sales continued to build during the quarter.
The product joins other successful offerings, including the Big Smasher, Big QP and Triple Dipper, which have helped Chili’s attract new customers. Marketing initiatives such as Margarita of the Month and refreshed advertising campaigns are also helping maintain the brand’s visibility and relevance.
Improving Margins Could Support Earnings
Brinker is also benefiting from better operating leverage. Fiscal 2026 revenues increased 7.9%, restaurant operating margin expanded 30 basis points and adjusted EPS advanced 20.6%. In the fourth quarter, revenues totaled $1.536 billion, while adjusted EPS rose 23% year over year to $3.07.
Restaurant operating margin improved to 18% from the prior year, aided by sales leverage. Labor costs were particularly favorable, improving 90 basis points year over year despite wage inflation and higher health-insurance costs.
Management expects further margin improvement as the business grows. Rather than simply maximizing near-term profitability, Brinker plans to reinvest in food, restaurant atmosphere and the overall guest experience. This approach could help sustain traffic gains and strengthen the brand over time.
Expansion Adds to the Long-Term Opportunity
Brinker’s fiscal 2027 outlook also supports the bullish case. The company expects revenues of $6.15 billion to $6.27 billion and adjusted EPS of $12.60 to $13.40. Its assumptions include mid-single-digit comparable-sales growth and positive traffic at Chili’s for the remainder of the year. The outlook also includes the benefit of a 53rd operating week.
EAT is simultaneously investing in its restaurant base. After completing 11 Chili’s reimages in fiscal 2026, Brinker plans to complete another 60 to 80 in fiscal 2027. New-unit growth is expected to be modest initially but accelerate from fiscal 2028, with a stronger development pipeline already taking shape.
Brinker’s Bottom Line Continues to Strengthen
Brinker’s earnings outlook remains encouraging, with estimates pointing to solid profit growth over the next two fiscal years. The company is expected to generate $13.01 in earnings per share in fiscal 2027, representing a 21.1% year-over-year increase. Earnings are projected to rise further in fiscal 2028, reaching $13.90 per share, up 6.8% from the prior-year level.
The continued improvement in earnings reflects Brinker’s strong operating momentum, particularly at Chili’s, where healthy traffic, menu innovation and improved restaurant-level economics are supporting profitability. If the company maintains this momentum, sustained earnings growth could provide further support for EAT shares.
EAT Offers Attractive Valuation
Despite its strong stock performance over the past three months, Brinker does not appear excessively valued relative to several restaurant peers. EAT currently trades at 17.32X forward 12-month earnings, which is below the industry average and suggests that the stock still offers a relatively reasonable valuation.
The valuation looks even more appealing when compared with several high-growth restaurant stocks. Wingstop, Shake Shack and Domino’s Pizza trade at forward P/E of 22.35X, 53.53X and 17.19X, respectively. While each company has its own growth profile, EAT’s lower valuation multiple, combined with its strong earnings outlook, could make the stock an attractive option for investors seeking a balance between growth and valuation.
EAT P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Does EAT Still Have Room to Run?
Brinker’s rally appears to be supported by a meaningful improvement in its underlying business rather than short-term market enthusiasm alone. Chili’s continues to strengthen its competitive position through compelling value, successful menu innovation, rising traffic and a more engaging guest experience, while improving restaurant economics are translating into stronger profitability.
The company also has additional growth opportunities through restaurant reimaging, new-unit development and disciplined capital allocation. At the same time, the stock’s valuation remains relatively reasonable compared with several restaurant peers, making the risk-reward profile appealing. With earnings momentum, a strengthening core brand and multiple avenues for future growth, investors may consider adding EAT to their portfolios as Brinker’s turnaround story continues to mature.
The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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EAT Surges 69% in 3 Months: Is the Stock Still Attractive?

The Cheesecake Factory Incorporated CAKE delivered a strong second-quarter 2026 performance, with improving sales and operating efficiency lifting restaurant-level margins to 20%, the highest level in a decade. Comparable sales rose 5.8%, supported by 2.7% traffic growth, while revenues topped $1 billion for the first time.
The margin expansion was driven by stronger sales leverage, improved labor productivity and better food efficiency. Labor costs declined 80 basis points as a percentage of sales, while other operating expenses fell 30 basis points. These gains more than offset a 20-basis-point increase in cost of sales caused largely by higher beef, produce and seafood costs.
Management also raised its expectations for full-year four-wall margin improvement to roughly 60 basis points, compared with 25 basis points previously. About half of the improvement is expected from commodities and half from labor, while the company plans to reinvest some gains in marketing and other initiatives to support future sales.
There are reasons to believe the momentum can continue. Menu innovation, the Cheesecake Rewards app, social-media engagement and operational execution are boosting traffic and frequency. The company also expects 2026 revenues of about $4 billion and plans to open as many as 26 restaurants.
Still, higher commodity and labor costs remain risks. Overall, CAKE’s record margin, healthy traffic and reinvestment opportunities suggest further upside may be possible if its sales momentum holds.
CAKE’s Margin Gains Stack Up Well Against Darden and Brinker
CAKE’s margin expansion compares favorably with other major casual-dining operators. Darden Restaurants DRI, whose portfolio includes Olive Garden and LongHorn Steakhouse, also benefits from scale and cost discipline. In fiscal 2026, Olive Garden’s segment profit margin improved to 22.5% from 22.3%, while LongHorn’s margin stood at 18.6%. Darden’s full-year same-restaurant sales increased 4.5%, highlighting continued demand despite a challenging consumer environment.
Meanwhile, Brinker International EAT, the parent of Chili’s, has delivered strong sales momentum through value offerings, operational improvements and brand engagement. In fiscal 2026, Chili’s comparable sales increased 5.6% in the fourth quarter, while Brinker’s restaurant operating margin reached 18% for the full fiscal year, up from 17.8%.
Against this backdrop, CAKE’s 20% restaurant-level margin stands out, particularly given its positive traffic growth and plans to reinvest in marketing and guest engagement. If traffic, productivity and menu innovation remain strong, CAKE could continue narrowing the gap with the strongest margin performers in casual dining.
CAKE’s Price Performance, Valuation & Estimates
Cheesecake Factory’s shares have surged 71.6% in the past six months, outperforming the Zacks Retail - Restaurants industry, the broader Retail and Wholesale sector and the S&P 500 index.
On a forward 12-month basis, CAKE trades at a P/E of 22.35, slightly down from the industry’s 22.64.
CAKE P/E (F12M)
CAKE’s earnings estimates for 2026 and 2027 have moved higher over the past 60 days. The estimates project year-over-year earnings growth of 19.9% in 2026 and 11% in 2027, pointing to continued momentum over the next two years.
CAKE currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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CAKE Expands Restaurant Margins to a Decade High: More Upside Ahead?

The Cheesecake Factory Incorporated CAKE has dramatically outperformed the restaurant industry over the past three months. While the industry has gained just 0.5%, CAKE’s shares have surged about 70.1%, reflecting a sharp improvement in investor sentiment.
The stock's rally has been supported by stronger-than-expected operating results, improving customer traffic, margin expansion and growing engagement with the company's digital rewards platform. In the second quarter of 2026, revenues topped $1 billion for the first time, while adjusted diluted EPS jumped 24% year over year to $1.44. The Cheesecake Factory brand also delivered 5.8% comparable sales growth and positive traffic, providing a stronger fundamental backdrop for the stock's gains.
In the same time frame, the stock has also outperformed other industry players like Brinker International, Inc. EAT and Darden Restaurants, Inc. DRI.
Traffic Growth Strengthens the Core Business
One of the biggest factors behind CAKE's improving performance is the return of positive traffic growth. Traffic at The Cheesecake Factory increased 2.7% year over year in the second quarter and exceeded the Black Box Casual Dining Index by 350 basis points. This helped average weekly sales reach an all-time high and pushed annualized unit volumes above $13.5 million. Management said the company also captured market share, suggesting that the sales improvement is not solely the result of higher menu prices.
Pricing contributed 3% to comparable sales, while traffic added 2.7% and mix was essentially flat. More importantly, management said trends modestly accelerated during the second half of the quarter and exited the period at a stronger rate than the quarterly average. This momentum is incorporated into the company's third-quarter outlook.
Menu Innovation Is Bringing Guests Back
CAKE's menu strategy is another important growth driver. The company refreshes the menu every six months, allowing it to introduce new offerings while maintaining the breadth that has long differentiated the brand. Recent Bites and Bowls offerings have resonated with customers, with management noting that guests ordering Bowls are visiting more frequently.
The company is also benefiting from social-media attention around both new and longstanding menu items. Some products that have been on the menu for years have recently gone viral, generating measurable traffic. Management said the brand's social-media mentions on a unit basis were two to three times the casual-dining average. The company has a dedicated social-listening infrastructure and plans to continue using consumer conversations to maintain awareness rather than relying on a one-time viral moment.
Cheesecake Rewards Could Support Longer-Term Frequency
The launch of the Cheesecake Rewards app has added another layer to CAKE's growth strategy. Management said app adoption exceeded expectations, generating strong member acquisition and engagement. The platform allows the company to facilitate reservations, provide personalized offers, improve online ordering and gather more information about customer behavior.
Importantly, management indicated that the benefits have continued beyond the initial promotional period. Customers are still downloading the app, making reservations and engaging with rewards. The company is also attracting some consumers who were not previously members of its rewards program. Management expects the resulting customer data to eventually enable more personalized marketing aimed at encouraging repeat visits.
Better Execution Is Expanding Margins
The improvement in sales is also translating into stronger profitability. Higher revenues, labor productivity and food efficiency lifted Cheesecake Factory's restaurant-level margin to 20%, its highest level in a decade. Companywide record net income reached $68 million, up 25% year over year, while adjusted EBITDA increased 18% to $118 million.
Management now expects about 60 basis points of full-year four-wall margin improvement, compared with its previous expectation of 25 basis points. Roughly half of the improvement is expected to come from commodities and half from labor, while the company continues to reinvest in marketing.
Expansion Adds to the Growth Story
CAKE also has a growing portfolio of restaurant concepts that could contribute to longer-term growth. The company remains on track to open as many as 26 restaurants in 2026, including up to seven Flower Child locations. Flower Child is currently a standout, with second-quarter comparable sales up 13% and restaurant-level margins of 20.1%.
North Italia remains a softer area, with comparable sales declining 3% and mature restaurant-level margins falling to 15.6%. However, management plans to test lower-priced menu options, lunch specials and increased marketing to improve traffic and value perception.
CAKE Growth Projection
Analysts have slightly raised their 2026 earnings expectations for Cheesecake Factory over the past 60 days, with the Zacks Consensus Estimate increasing to $4.52 per share from $4.01. The 2027 estimate has increased to $5.01 from $4.40 per share. The consensus estimates point to earnings growth, with 2026 and 2027 EPS expected to increase 19.9% and 11% year over year, respectively.
Revenue growth is also expected to remain steady. The Zacks Consensus Estimate projects revenues of $4.02 billion for 2026 and $4.29 billion for 2027, representing year-over-year growth of 7% and 6.9%, respectively.
CAKE Stock Trades at a Discount
Cheesecake Factory currently trades at a premium to its industry based on the forward 12-month price-to-earnings (P/E) ratio. The stock’s multiple stands at 23.12X, below the industry average of 22.86X. By comparison, Brinker International and Darden Restaurants trade at higher forward P/E multiples of 17.26X and 18.69X, respectively.
P/E (F12M)
Wrapping Up
CAKE’s recent performance suggests that its rally is supported by improving business fundamentals rather than sentiment alone. Stronger traffic, effective menu innovation, rising customer engagement, better restaurant-level profitability and continued expansion provide multiple avenues for sustained growth. The company is also benefiting from a stronger digital connection with customers and the ability to use social media to boost brand awareness and frequency.
With earnings and revenue growth expected to remain healthy and the stock’s valuation appearing reasonable relative to its industry, CAKE offers a compelling combination of operational momentum and long-term growth potential. These factors make the stock worthy of consideration for investors seeking exposure to a restaurant company with improving fundamentals and several potential catalysts ahead. CAKE currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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CAKE Stock Soars 70% in the Past 3 Months: Can the Rally Continue?

Shares of BJ's Restaurants, Inc. BJRI have rallied strongly over the past three months as improving traffic trends, operating execution and profitability have strengthened investor confidence. During this timeframe, BJRI stock has jumped 43.7%, sharply outperforming the Zacks Retail - Restaurants industry's 0.5% decline, the Zacks Retail and Wholesale sector’s 2.5% fall and the S&P 500’s 0.5% gain.
The rally has been supported by improving momentum across several areas of the business. BJ’s Restaurants’ second-quarter fiscal 2026 results benefited from strong traffic growth and broad-based demand across geographies, dayparts and channels. Seasonal Pizookie offerings, the Pizookie Meal Deal and menu innovation helped attract new guests and encourage repeat visits, while more efficient marketing supported traffic gains. Improved guest satisfaction, better food-waste management and disciplined labor execution also supported restaurant-level profitability.
BJRI’s 3-Month Price Performance
For additional peer context, Shake Shack Inc. SHAK, Darden Restaurants, Inc. DRI and Brinker International, Inc. EAT have gained 17.4%, 7% and 72%, respectively, over the past three months.
BJRI's Menu and Marketing Initiatives Drive Traffic
BJ’s Restaurants is benefiting from menu innovation, value-focused offerings and increasingly effective marketing. Comparable restaurant sales rose 6.5% in the fiscal second quarter, driven by an 8.3% increase in traffic. The company significantly outperformed casual-dining benchmarks, while sales and traffic growth extended across geographies, dayparts and channels.
Seasonal Pizookies and the Pizookie Meal Deal have been particularly effective in attracting new customers and encouraging repeat visits. Meanwhile, the company’s broader menu renovation is gaining traction, with pizza, burger and chicken sandwich initiatives driving higher incidence, sales and margins. Marketing efficiency has also improved as management better aligns product launches, messaging and spending with high-volume periods.
BJRI's Operational Execution Supports Profitability
Operational improvements are helping BJRI translate stronger traffic into healthier restaurant economics. Better food-waste management, lower complimentary food and beverage incidence and disciplined labor execution supported profitability despite elevated commodity inflation. Sales leverage helped improve labor efficiency across hourly labor, management and benefits, while guest-satisfaction measures continued to strengthen.
BJRI is also investing in employee training, point-of-sale modernization, tablet upgrades and an AI-supported labor model to improve restaurant execution. Management said these initiatives are contributing to better guest metrics and employee retention, while remodeled restaurants are generating stronger traffic growth than the rest of the portfolio.
BJRI's Cash Generation and Raised Outlook Support Momentum
BJRI continues to generate solid cash flow while strengthening its balance sheet. Operating cash flow increased to $74 million in the first half of fiscal 2026 from $66.9 million in the prior-year period. The company has deployed cash toward restaurant maintenance and remodels, new-unit development, share repurchases and debt reduction.
During the fiscal second quarter, BJRI repaid $18 million of debt, reducing net debt to approximately $30 million from $61 million at the start of the year. The stronger balance sheet gives management greater flexibility to fund remodels, new restaurants and shareholder returns. Strong first-half execution also prompted management to raise its fiscal 2026 outlook.
Comparable restaurant sales growth guidance increased to 3%-4% from 1%-3%, restaurant-level operating profit guidance rose to $228-$235 million from $221-$233 million, and adjusted EBITDA guidance increased to $145-$152 million from $140-$150 million.
Earnings Estimate Revision of BJRI Stock
The Zacks Consensus Estimate for fiscal 2026 and 2027 earnings per share has increased in the past 30 days, reflecting improving expectations for the company’s earnings trajectory. The revised estimates for fiscal 2026 and 2027 imply year-over-year increases of 4.3% and 4.9%, respectively.
Meanwhile, earnings for Shake Shack are projected to decline 14.4%, while Darden Restaurants and Brinker International are projected to grow 6.1% and 20.6%, respectively, this year.
BJRI Stock Trades at a Premium
BJ's Restaurants is currently priced at a premium relative to its industry. The stock has a forward 12-month price-to-earnings ratio of 25.71, above the industry average. The premium suggests that investors are already pricing in a meaningful portion of the company’s improving traffic, operating execution and earnings prospects.
BJRI’s P/E Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
Can BJRI Stock Extend Its Recent Rally?
BJ’s Restaurants’ recent momentum rests on a stronger operating foundation. Traffic growth remains robust, menu renovation is driving better product economics, marketing efficiency is improving and restaurant execution continues to strengthen. Investments in remodels, technology and employee training should further enhance the guest experience, while stronger cash generation and lower debt provide additional financial flexibility.
The raised fiscal 2026 outlook adds confidence that these improvements can continue. However, after the stock’s sharp three-month advance and with BJRI trading at a premium to its industry, further upside will increasingly depend on sustained execution. Commodity inflation, promotional mix pressure and elevated operating costs remain risks. If BJRI can maintain traffic gains, deliver further restaurant-level profitability improvements and execute against its higher guidance, the stock could have room to extend its rally.
BJRI stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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BJ's Restaurants Stock Gains 44% in 3 Months: Can Momentum Hold?

Cracker Barrel Old Country Store, Inc. CBRL has delivered a sharp share-price rebound, reflecting improving operating execution, stronger guest metrics and growing confidence in the company's recovery efforts. CBRL stock has surged 78.1% in the past six months against the Zacks Retail - Restaurants industry's 9.5% decline. Over the same period, CBRL has also outperformed the Zacks Retail and Wholesale sector and the S&P 500, which gained 2.9% and 11%, respectively.
The rally has been supported by signs of progress across several areas of the business. Cracker Barrel's third-quarter fiscal 2026 results exceeded management's expectations as stronger cost management, improving underlying traffic trends and a higher average check supported performance. Menu initiatives, loyalty engagement and improved guest-experience scores also gained traction, while tighter control over food waste, labor, supplies and advertising supported profitability. Management's decision to raise its fiscal 2026 revenue and adjusted EBITDA outlook further strengthened the recovery narrative.
CBRL’s 6-Month Price Performance
For additional peer context, BJ's Restaurants, Inc. BJRI, Darden Restaurants, Inc. DRI and Brinker International, Inc. EAT have gained 72%, 3% and 67.8%, respectively, over the past year.
CBRL's Menu, Value and Loyalty Strategies Strengthen Guest Engagement
Cracker Barrel continues to sharpen its value proposition through affordable entry-price offerings, premium choices and targeted menu innovation. During the fiscal third quarter, guest value scores increased 5% year over year. Management also emphasized that the company's average check remains below broader casual- and family-dining levels. Its barbell pricing strategy combines lower-priced offerings, such as the Sunrise Pancake Special and Early Dinner Deals, with add-ons and premium options designed to expand choice while supporting margins.
Menu changes are also becoming more focused on what guests want. Cracker Barrel brought back favorites such as Sugar Cured and Country Ham dinners and Carrot Cake while adding offerings including Garden and Farm House Scrambles and Smoky Southern Salmon. Management said the menu mix improved from the first half of fiscal 2026, with add-ons, sides and Barrel Bites contributing to stronger check performance. Cracker Barrel Rewards remains another important engagement tool. The program has grown to nearly 12 million members, with member-tracked sales exceeding 40% during the third quarter of fiscal 2026. Loyalty-member visits increased year over year, while retention among the company's most valuable loyalty guests remained strong, providing an important traffic tailwind.
CBRL's Improving Operations and Guest Metrics Support Recovery
Cracker Barrel's third-quarter fiscal 2026 performance showed signs that operational initiatives are gaining traction. Total revenues were $797.4 million, while comparable restaurant sales declined 2.6%. Comparable restaurant traffic fell 6.7%, but management said the underlying traffic trend was gradually improving and that comparable-store performance came in somewhat better than expected. The restaurant average check increased 4.3%, including 4.4% menu pricing, helping offset some of the traffic pressure.
Retail execution provided another encouraging signal. Retail comparable sales outperformed restaurant comparable sales for the first time in more than four years, while units per transaction and average unit retail improved year over year. Management attributed the progress to SKU rationalization, optimized markdowns and improved merchandising. Product categories such as sensory and fidget toys, collectible salt-and-pepper shakers and the American Heritage assortment also resonated with customers.
CBRL's Cost Discipline and Liquidity Support Profitability
Cost control remains central to Cracker Barrel's recovery. The corporate restructuring completed in the second quarter of fiscal 2026 is expected to generate $20-$25 million in annualized G&A savings. The company also lowered advertising spending in the second half of fiscal 2026, with management identifying restructuring and other expense-saving actions as significant contributors to third-quarter fiscal 2026 adjusted EBITDA.
Importantly, the improved execution prompted management to raise its fiscal 2026 outlook. Revenue guidance increased to $3.27-$3.30 billion from $3.24-$3.27 billion, while adjusted EBITDA guidance rose sharply to $120-$125 million from $85-$100 million. Expected commodity and hourly wage inflation were also lowered to the low-2% range. Cracker Barrel also maintained substantial liquidity. The company ended the third quarter of fiscal 2026 with $541.3 million of available credit-facility capacity and no outstanding revolver borrowings. This provides financial flexibility as management continues investing in core operations while pursuing its profitability initiatives.
Earnings Estimate Revision of CBRL Stock
The Zacks Consensus Estimates for CBRL's fiscal 2027 and fiscal 2028 earnings have moved upward over the past 30 days, reflecting improving expectations around the company's recovery efforts. However, the revised estimates for fiscal 2026 and fiscal 2027 imply year-over-year declines of 5.4% and 100%, respectively, indicating that the earnings recovery remains uneven.
Meanwhile, earnings for BJ's Restaurants, Darden Restaurants and Brinker International are projected to grow 4.9%, 6.1% and 20.6%, respectively, this year.
CBRL Stock Trades at a Discount
From a valuation standpoint, CBRL trades at a forward 12-month price-to-sales (P/S) multiple of 0.35, well below the industry's average of 3.33. The discount reflects continued investor caution surrounding weak restaurant traffic, negative comparable-store sales and lingering pressure on underlying profitability. Nonetheless, improving guest-satisfaction metrics, stronger loyalty engagement, better retail execution and disciplined cost management provide support to the recovery story.
CBRL’s P/S Ratio (Forward 12-Month) vs. Industry
Image Source: Zacks Investment Research
Can CBRL Stock Sustain Its Rally?
Cracker Barrel's recovery efforts are beginning to gain traction, supported by improving guest metrics, stronger loyalty engagement, a higher average check and better retail execution. Cost-control initiatives, including restructuring savings, lower advertising expenses and improved food-waste management, are also helping profitability. Management's decision to raise fiscal 2026 revenue and adjusted EBITDA guidance further signals confidence that recent operational improvements can continue.
CBRL also trades at a discount to the industry, which provides some valuation support. However, risks remain from persistent traffic weakness, negative comparable restaurant sales, softer underlying profitability and continued pressure on consumer spending. Sustained execution will be critical for the stock to build on its strong six-month rally. If Cracker Barrel can deliver on its raised fiscal 2026 outlook while maintaining cost discipline and rebuilding guest frequency, the recent momentum could have room to continue.
CBRL stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Brinker International, Inc.

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