2 Reasons to Like EAT and 1 to Stay Skeptical

September 04, 2025 at 00:01 AM EDT

EAT Cover Image

Since March 2025, Brinker International has been in a holding pattern, posting a small return of 4.3% while floating around $159.15. The stock also fell short of the S&P 500’s 11.6% gain during that period.

Is now the time to buy EAT? Find out in our full research report, it’s free.

Why Does EAT Stock Spark Debate?

Founded by Norman Brinker in Dallas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.

Two Positive Attributes:

1. Surging Same-Store Sales Show Increasing Demand

Same-store sales is a key performance indicator used to measure organic growth at restaurants open for at least a year.

Brinker International has been one of the most successful restaurant chains over the last two years thanks to skyrocketing demand within its existing dining locations. On average, the company has posted exceptional year-on-year same-store sales growth of 13.3%.

Brinker International Same-Store Sales Growth

2. Increasing Free Cash Flow Margin Juices Financials

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

As you can see below, Brinker International’s margin expanded by 2.6 percentage points over the last year. This is encouraging because it gives the company more optionality. Brinker International’s free cash flow margin for the trailing 12 months was 7.7%.

Brinker International Trailing 12-Month Free Cash Flow Margin

One Reason to be Careful:

Lack of New Restaurants, a Headwind for Revenue

A restaurant chain’s total number of dining locations often determines how much revenue it can generate.

Brinker International listed 1,628 locations in the latest quarter and has kept its restaurant count flat over the last two years while other restaurant businesses have opted for growth.

When a chain doesn’t open many new restaurants, it usually means there’s stable demand for its meals and it’s focused on improving operational efficiency to increase profitability.

Brinker International Operating Locations

Final Judgment

Brinker International’s merits more than compensate for its flaws. With its shares trailing the market in recent months, the stock trades at 16.1× forward P/E (or $159.15 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More Than Brinker International

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