Brinker International Inc (NYSE:EAT) Ticks Key Boxes for Growth Investors

A systematic method for growth investing can help investors find companies with solid fundamental momentum. One such system comes from Louis Navellier's "The Little Book That Makes You Rich," which lists eight distinct rules for choosing high-quality growth stocks. These rules concentrate on earnings revisions, surprises, sales growth, margin expansion, cash flow strength, earnings growth, earnings momentum, and return on equity. When used with a stock screener, this method can identify companies showing outstanding operational and financial results.

Meeting the Growth Criteria

Brinker International Inc (NYSE:EAT) shows solid alignment with Navellier's growth principles across several important metrics:

• Earnings Revisions and Surprises: Analyst EPS estimates for the next quarter have been increased by 17.05% over the last three months, showing rising optimism. The company has also surpassed EPS estimates in each of the last four quarters, with an average surprise of 23.21%, indicating a repeated history of outperforming forecasts.

• Solid Sales and Earnings Growth: The company displays notable top-line and bottom-line improvement. Revenue growth is 21.95% year-over-year and 21.00% quarter-over-quarter. More notably, EPS has increased 116.02% over the last year and 54.66% compared to the same quarter last year.

• Improving Profitability and Solid Cash Flow: Operational performance is getting better significantly, with the operating margin improving by 66.28% over the past year. The company is also producing good cash, with free cash flow growth increasing 85.52% year-over-year.

• Notable Earnings Momentum and ROE: The current quarterly EPS growth of 54.66% is much higher than the growth rate from the same quarter a year ago (15.83%), showing solid positive momentum. The company also provides excellent returns to shareholders, shown by a very high return on equity of 103.29%.

Fundamental Health Overview

An examination of Brinker International's wider fundamental profile supports the positive results from the Little Book screen. The company receives a good overall fundamental rating of 7 out of 10. Its profitability is a specific strength, scoring 8 out of 10, supported by high returns on assets, equity, and invested capital. The financial health score of 7 out of 10 indicates acceptable solvency, though it is important to mention some common liquidity ratios seem lower because of the characteristics of the restaurant business. From a valuation standpoint, the stock looks fairly valued next to both industry competitors and the wider market, with a P/E ratio of 14.03. For a complete breakdown, you can see the full fundamental analysis report.

Investment Considerations

For investors using a method like Navellier's, Brinker International offers a strong case. The company not only matches but frequently surpasses the specific quantitative limits defined in the system. The mix of solid earnings surprises, quickening sales and profit improvement, and large margin improvement points to a company that is performing well in its market. The high return on equity shows efficient use of shareholder money, while the increased analyst estimates suggest rising confidence in its short-term outlook. While the wider market displays a positive short-term direction, the fundamental factors found by this screen are specific to the company and significant.

This assessment was produced using a stock screen based on the ideas from "The Little Book That Makes You Rich." To see other companies currently meeting this strict growth screen, you can view the live screening results here.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation to buy or sell any security, or an offer to solicit any transaction. All investing involves risk, including the possible loss of principal. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.