BMO Capital Markets raised its price target for Brinker International (ticker: EAT) to $175.00 from $170.00 while retaining a Market Perform rating on the restaurant operator's shares. The move followed Brinker’s fiscal second-quarter 2026 results, which came in ahead of analysts’ forecasts on several fronts.
Brinker reported adjusted diluted earnings per share of $2.87 for the quarter. That result exceeded a consensus estimate referenced earlier in the reporting as $2.62 and also topped a separate forecast cited at $2.57, the latter representing an 11.67% surprise versus the company’s adjusted EPS. Revenue for the period reached $1.45 billion, ahead of an anticipated $1.41 billion.
The company’s performance was underpinned by stronger comparable sales at its Chili’s brand and improved restaurant margins. Management reported traffic gains at Chili’s despite contending with a challenging comparison to a prior year in which traffic increased by roughly 20% over the same period. BMO observed that the traffic resilience points to the "durability of brand repositioning" at Chili’s, while also noting that results benefited from a favorable calendar tailwind during the quarter.
On guidance, Brinker raised its outlook for fiscal 2026 and included an explicit $0.15 per share headwind tied to storm-related impacts. BMO flagged the company’s "compressed flow-through assumption" in its updated guidance, suggesting there may be additional upside potential to the new outlook if operating leverage or margin conversion proves stronger than management assumed in guidance.
From a valuation and financial-health standpoint, the shares trade at a price-to-earnings ratio of 15.9 and show a low price/earnings-to-growth (PEG) ratio of 0.21, metrics the analyst noted when assessing value relative to growth prospects. Financial indicators cited in the report include a Piotroski Score of 9, a metric suggesting strong financial health, and trailing twelve-month revenue growth of 17.9%.
Despite the stronger quarter and the modestly higher price target, BMO kept its Market Perform rating. The firm explained that a sizable portion of the market's optimism surrounding Brinker already appears reflected in the stock price, creating a more balanced risk/reward at current levels. Independent analyst activity noted in the reporting indicates seven analysts have revised earnings estimates upward for the upcoming period, and the stock was described as trading near its assessed fair value.
Key operational and external factors highlighted in the quarter include the positive influence of calendar timing and the offsetting impact of storm-related costs. The company’s ability to grow traffic at Chili’s in the face of a steep prior-year comparison was cited as evidence that recent repositioning efforts have gained traction. At the same time, the inclusion of a measurable weather-related charge in guidance underscores susceptibility to episodic external disruptions.
Investors and market participants will likely monitor the pace of margin improvement and the extent to which the company can convert sales momentum into incremental earnings beyond the assumptions baked into the current guidance. BMO’s reference to potential upside tied to flow-through assumptions signals that further operational leverage could influence future analyst revisions and investor sentiment.
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