Recap

In a word: mixed.

For their fiscal fourth quarter, the parent company of Chili’s and Maggiano’s reported mixed results, beating revenue expectations but missing on EPS.

• Revenue: $1.21B reported v. $1.16B expected; +3.4% surprise.
• EPS: $1.61 reported v. $1.72 expected; -6.62 surprise.

Guidance for fiscal year 2025 mirrored the quarter as revenue beat and EPS fell short.

• Revenue range: $4.55B – $4.62B reported v. $4.5B mean estimate.
• EPS: $4.35 – $4.75 reported v. $4.785 mean estimate.

In Between the Top and Bottom

While expenses at Chili’s have increased compared to the same time last year, they have decreased as a percentage of revenue. Despite raising menu prices, Chili’s saw a 5.9% increase in foot traffic. These metrics suggest that management has protected margins against inflation, defended price points, and attracted new customers to their restaurants through an uncertain macroenvironment and competitive industry.

Reaction

A little over an hour into the session, EAT has rebounded from its lows but remains down ~11%. Even if the stock loses its its 90-day SMA (light blue), the stock has managed to avoid setting a lower low, keeping the current uptrend intact.

Gorilla Take

While the stock came into the quarter on a heater, a sell-off of this magnitude following a quarter that doesn’t undo the bull thesis leads me to believe I must be overlooking something. It is possible that investors are using the guidance as cover to reduce positions ahead of tomorrow’s retail sales print or potential competition from McDonald’s “$5 Meal Deal.”

In the event I am not missing anything and investors are simply being short-sighted, this could become a trade opportunity. I would target $70 (resistance) or the 52-week high of $75 as an exit, implying 15-22% upside. On the downside, violating $55 (green horizontal line), where the recent rally catalyzed by earnings began, caps losses at ~8%. That said, I’d wait for the stock to reclaim its 90-day SMA at $62 before initiating a position, slightly altering the risk-reward calculation.

Looking at this from the perspective of a long-term investor, even though there is a lot to like about Brinker’s story, at this price, the growth and competitive landscape doesn’t create a high enough margin of safety. The entry point would need to be better – lower – to warrant real consideration. I would wait for a potential retest at $55, where strong support should exist and reevaluate there.