Brinker International Inc (NYSE:EAT) Passes Louis Navellier's "Little Book" Growth Screen

A screening method based on Louis Navellier's "The Little Book That Makes You Rich" focuses on finding companies showing strong, fundamental growth traits. The strategy uses eight different rules made to identify stocks with positive earnings revisions, consistent earnings surprises, increasing sales and earnings growth, rising profitability, good cash flow generation, and a high return on equity. This systematic method aims to find companies in a strong growth phase before the wider market completely sees their potential. One company currently passing this strict screen is Brinker International Inc (NYSE:EAT).

Meeting the Little Book Criteria

Brinker International, the parent company of Chili's Grill & Bar and Maggiano's Little Italy, shows good alignment with many of Navellier's important growth rules. The given data points show a company with significant fundamental momentum.

• Positive Earnings Revisions: Analysts have increased their earnings estimates for the next quarter by 18.61% over the last three months. This upward revision is a key signal in the Little Book strategy, as it indicates that Wall Street is gaining more confidence in the company's near-term profit potential based on new positive information.
• Positive Earnings Surprises: The company has exceeded analyst earnings expectations in all of the last four quarterly reports, with an average beat of 23.21%. Regularly doing better than expectations is a sign of a well-run growth company and often makes analysts re-evaluate their future estimates upward.
• Increasing Growth: Brinker shows notable growth increase, a central part of the strategy.
  • Sales Growth (Q2Q): 21.00%
  • EPS Growth (Q2Q): 54.66%
  • More importantly, the current quarterly EPS growth of 54.66% is much higher than the growth rate of 15.83% from the same quarter a year ago, indicating good positive earnings momentum.
• Rising Profitability: The company's operating margin has increased by 66.28% over the past year. This shows that Brinker is not only growing its revenue but is also becoming more efficient and profitable, an important factor for lasting growth.
• Good Cash Flow & High ROE: Free cash flow has grown by 85.52% year-over-year, giving the company financial flexibility. Furthermore, the Return on Equity (ROE) is at a very good 103.29%, indicating that Brinker is very effective at creating profits from shareholder equity.

Fundamental Analysis Overview

A look at the detailed fundamental analysis report for Brinker International shows a mostly positive picture that backs up the findings of the Little Book screen. The company gets an overall rating of 7 out of 10, with specific strength in its profitability and financial health.

• Profitability: The profitability score is a high 8/10, pushed by very good returns on assets, equity, and invested capital that put it near the top performers in its industry. Profit and operating margins have shown good improvement in recent years.
• Health: The financial health score is a good 7/10. While liquidity ratios (current and quick ratio) are low, this is offset by very good solvency metrics, including a strong Altman-Z score and a very low debt-to-free-cash-flow ratio, suggesting the company can handle its debt obligations without difficulty.
• Valuation: The valuation score is 7/10. The stock seems fairly priced or somewhat inexpensive compared to both the wider S&P 500 and its industry peers based on Price/Earnings and Price/Free Cash Flow ratios. This indicates the strong growth may not be completely reflected in the stock price.

A Candidate for Growth-Focused Investors

Brinker International presents a strong case for investors using a strategy like the one described in Navellier's Little Book. The company is not only meeting but surpassing many of the quantitative growth filters, showing strong momentum in sales, earnings, and profitability. Its good underlying financial health and fair valuation provide a stable base for this growth story. While the screen finds potential, it is always a beginning point for more detailed, individual research.

For investors interested in finding other companies that currently pass this growth screen, you can see the live, updated results here: View the Little Book Screen Results.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. All investment involves risk, and past performance is not a guarantee of future results. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.