EAT
EAT
Accumulate 2026-05-10
Model
DCF
Price at Report
$138.68
Base IV
$169.31
Bear IV
$82.90
Bull IV
$294.63
Entry Zone: 79-156 · Sell Above: 250
Bore Family Office
Valuation Report — Brinker International (EAT) • May 10, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 9.67% • Current Price: $138.68
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Brinker International owns and franchises two casual dining brands: Chili's Grill & Bar (the crown jewel, ~87% of revenue) and Maggiano's Little Italy (~13%). The company operates over 1,600 restaurants across 29 countries, with roughly 75% company-owned and 25% franchised. Under CEO Kevin Hochman (appointed 2022), Chili's has undergone a dramatic turnaround: menu simplification (halved the menu from 90+ items), the "3 For Me" value platform, a successful chicken sandwich launch, and an aggressive reimaging program are driving industry-leading same-store sales growth and traffic gains. Margins have inflected from 3.5% operating margin (FY2023) to nearly 10% (TTM) — a rare operating leverage story in casual dining. Maggiano's remains a smaller, stable contributor with catering upside.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Chili's Grill & Bar | $4,700M | 87% | +10.0% | 10.5% | Turnaround brand; menu revamp, chicken sandwich platform, reimaging |
| Maggiano's Little Italy | $684M | 13% | +3.0% | 7.0% | Stable; catering/carryout growth opportunity |
| Blended Growth Rate | — | 100% | +9.1% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 4 — Operating Leverage: Revenue growing modestly with profits inflecting rapidly. The classic DCF sweet spot — FCF is reliable, growing, and well-anchored to analyst estimates.
Why this drives model selection: Classic DCF sweet spot — FCF inflecting and growing rapidly.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 51.9% | ≥12% strong |
| FCF Margin | 8.8% | 5–10% adequate |
| Debt / EBITDA | 2.3x | 2–4x moderate |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Expanding | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $3,338 | $3,804 | $4,133 | $4,415 | $5,384 |
| Rev YoY Growth | — | +14.0% | +8.6% | +6.8% | +21.9% |
| Gross Margin | 15.1% | 13.1% | 12.1% | 14.2% | 18.2% |
| EBITDA ($M) | $350 | $324 | $313 | $400 | $719 |
| EBITDA Margin | 10.5% | 8.5% | 7.6% | 9.1% | 13.4% |
| Operating Income ($M) | $199 | $160 | $144 | $230 | $512 |
| Operating Margin | 6.0% | 4.2% | 3.5% | 5.2% | 9.5% |
| Net Income ($M) | $132 | $118 | $103 | $155 | $383 |
| Net Margin | 4.0% | 3.1% | 2.5% | 3.5% | 7.1% |
| EPS (diluted) | $2.83 | $2.58 | $2.28 | $3.40 | $8.32 |
| Free Cash Flow ($M) | $276 | $102 | $71 | $223 | $414 |
| Annual DPS | $0.000 | $0.000 | $0.000 | $0.000 | $0.000 |
| Total Debt ($M) | $2,022 | $2,253 | $2,150 | $1,985 | $1,676 |
💹 Capital Return & Share Count Analysis
Net Share Change
-24.0% (2016→2025)
📉 Net reduction — buybacks exceed issuances
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2016 | 58.7M | — | $285 | 3.5% |
| 2017 | 50.6M | -13.8% | $371 | 5.3% |
| 2018 | 45.7M | -9.7% | $303 | 4.8% |
| 2019 | 38.3M | -16.2% | $168 | 3.2% |
| 2020 | 38.2M | -0.3% | $32 | 0.6% |
| 2021 | 45.5M | +19.1% | $4 | 0.1% |
| 2022 | 44.8M | -1.5% | $101 | 1.6% |
| 2023 | 44.1M | -1.6% | $5 | 0.1% |
| 2024 | 44.4M | +0.7% | $26 | 0.4% |
| 2025 | 44.6M | +0.5% | $90 | 1.5% |
Brinker has reduced shares by 27% from 2016 levels (58.7M → 42.9M), primarily through aggressive buybacks in 2016–2019. The pandemic halted buybacks, and FY2022–2023 saw minimal repurchases as the company focused on debt reduction. FY2025 buybacks resumed at $90M with an expanded authorization. TTM buyback yield is ~3.2%. The company suspended its dividend in 2020 and has not reinstated it — all capital return flows through share repurchases. Net income +187% but EPS +194% over FY2023→FY2025 — a 7pp amplification from share reduction.
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 1.335 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 11.64% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 3.20% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 2.67% | × (1 − 16%) |
| Weight Equity (We) | 78.0% | Mkt cap $0.0B |
| Weight Debt (Wd) | 22.0% | Gross debt $0.0B |
| WACC | 9.67% | DCF discount rate |
📈 DCF Scenarios
$83
🔴 Bear
$169
📊 Base
$295
🚀 Bull
$138.68
Current Price
$183
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 4.0% | 3.0% | 2.0% | 11.17% | $83 | ▼40.2% |
| 📊 Base | 8.0% | 5.0% | 2.5% | 9.67% | $169 | ▲22.1% |
| 🚀 Bull | 12.0% | 6.0% | 3.0% | 8.67% | $295 | ▲112.5% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 4.0% | Stage 2: 3.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.44B | $0.40B | $0.40B |
| Year 2 ✦ | Stage 1 | $0.46B | $0.37B | $0.77B |
| Year 3 ✦ | Stage 1 | $0.48B | $0.35B | $1.12B |
| Year 4 ✦ | Stage 1 | $0.49B | $0.32B | $1.44B |
| Year 5 ✦ | Stage 1 | $0.51B | $0.30B | $1.74B |
| Year 6 | Stage 2 | $0.53B | $0.28B | $2.02B |
| Year 7 | Stage 2 | $0.54B | $0.26B | $2.28B |
| Year 8 | Stage 2 | $0.56B | $0.24B | $2.52B |
| Year 9 | Stage 2 | $0.57B | $0.22B | $2.74B |
| Year 10 | Stage 2 | $0.59B | $0.21B | $2.94B |
| Terminal | — | TV=$6.6B | PV(TV)=$2.3B (44% of EV) | EV=$5.2B |
| Intrinsic Value | — | — | EV $5.2B − Net Debt → Equity / Shares | $83 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (11.17%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $6.6B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $2.3B). Enterprise Value = PV of FCFs ($2.9B) + PV of TV ($2.3B) = $5.2B. Subtracting net debt gives equity value of $3.6B, divided by shares outstanding = $83 per share.
Base Scenario
Stage 1: 8.0% | Stage 2: 5.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.50B | $0.46B | $0.46B |
| Year 2 ✦ | Stage 1 | $0.55B | $0.46B | $0.91B |
| Year 3 ✦ | Stage 1 | $0.59B | $0.45B | $1.36B |
| Year 4 ✦ | Stage 1 | $0.63B | $0.44B | $1.80B |
| Year 5 ✦ | Stage 1 | $0.67B | $0.42B | $2.22B |
| Year 6 | Stage 2 | $0.70B | $0.40B | $2.62B |
| Year 7 | Stage 2 | $0.74B | $0.39B | $3.01B |
| Year 8 | Stage 2 | $0.78B | $0.37B | $3.38B |
| Year 9 | Stage 2 | $0.81B | $0.35B | $3.74B |
| Year 10 | Stage 2 | $0.86B | $0.34B | $4.07B |
| Terminal | — | TV=$12.2B | PV(TV)=$4.9B (54% of EV) | EV=$8.9B |
| Intrinsic Value | — | — | EV $8.9B − Net Debt → Equity / Shares | $169 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.67%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $12.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $4.9B). Enterprise Value = PV of FCFs ($4.1B) + PV of TV ($4.9B) = $8.9B. Subtracting net debt gives equity value of $7.3B, divided by shares outstanding = $169 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 12.0% | Stage 2: 6.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.56B | $0.52B | $0.52B |
| Year 2 ✦ | Stage 1 | $0.63B | $0.53B | $1.05B |
| Year 3 ✦ | Stage 1 | $0.70B | $0.55B | $1.59B |
| Year 4 ✦ | Stage 1 | $0.77B | $0.55B | $2.15B |
| Year 5 ✦ | Stage 1 | $0.85B | $0.56B | $2.71B |
| Year 6 | Stage 2 | $0.90B | $0.55B | $3.25B |
| Year 7 | Stage 2 | $0.96B | $0.53B | $3.79B |
| Year 8 | Stage 2 | $1.01B | $0.52B | $4.31B |
| Year 9 | Stage 2 | $1.07B | $0.51B | $4.82B |
| Year 10 | Stage 2 | $1.14B | $0.50B | $5.31B |
| Terminal | — | TV=$20.7B | PV(TV)=$9.0B (63% of EV) | EV=$14.3B |
| Intrinsic Value | — | — | EV $14.3B − Net Debt → Equity / Shares | $295 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (8.67%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $20.7B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $9.0B). Enterprise Value = PV of FCFs ($5.3B) + PV of TV ($9.0B) = $14.3B. Subtracting net debt gives equity value of $12.6B, divided by shares outstanding = $295 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 7.7% | $196 | $209 | $225 | $244 | $268 |
| 8.2% | $178 | $188 | $201 | $216 | $234 |
| 8.7% | $161 | $170 | $181 | $193 | $207 |
| 9.2% | $147 | $155 | $163 | $173 | $185 |
| 9.7% | $135 | $141 | $148 | $157 | $166 |
| 10.2% | $124 | $130 | $136 | $142 | $150 |
| 10.7% | $115 | $119 | $124 | $130 | $137 |
| 11.2% | $106 | $110 | $114 | $119 | $125 |
| 11.7% | $98 | $102 | $105 | $110 | $114 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| Darden Restaurants | DRI | 22.5x | 14.8x | 18.2x | 2.8% | Olive Garden parent; larger, more mature |
| Texas Roadhouse | TXRH | 29.1x | 17.5x | 24.0x | 1.4% | High-growth casual dining comp |
| Restaurant Brands | QSR | 18.8x | 13.2x | 20.5x | 3.1% | Franchise model (Burger King, TH) |
| Yum! Brands | YUM | 21.0x | 14.0x | 19.5x | 1.9% | Franchise-heavy; KFC/Pizza Hut/Taco Bell |
| Brinker (TTM) | EAT | 17.8x | 10.7x | 7.8x | 0% | Turnaround story; FCF inflecting |
| Brinker (5yr avg) | EAT | 28.0x | 16.5x | 35.0x | — | Historical averages include lean years |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $0.000 |
| Current Yield | 0.00% |
| Consecutive Growth Years | 0 |
| 1-yr DPS CAGR | N/A |
| 3-yr DPS CAGR | N/A |
| 5-yr DPS CAGR | N/A |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 0.0% |
| FCF Payout Ratio | 0.0% |
| Sustainability Verdict | N/A — Dividend Suspended |
Brinker suspended its quarterly dividend ($0.38/share) in early 2020 during COVID and has not reinstated it. All capital return now flows through share buybacks. Current buyback yield is ~3.2%. With net debt/EBITDA at 2.3× and improving, there is capacity for dividend reinstatement, but management has prioritized buybacks and debt reduction. A dividend reinstatement would be a positive catalyst.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $2.83 | — | — | — | Actual |
| 2022 | $2.58 | — | — | — | Actual |
| 2023 | $2.28 | — | — | — | Actual |
| 2024 | $3.40 | — | — | — | Actual |
| 2025 | $8.32 | — | — | — | Actual |
| 2026 | $10.45 | $10.86 | $11.40 | 25 | Estimate |
| 2027 | $11.60 | $12.59 | $13.57 | 25 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $3.3B | — | — | — | Actual |
| 2022 | $3.8B | — | — | — | Actual |
| 2023 | $4.1B | — | — | — | Actual |
| 2024 | $4.4B | — | — | — | Actual |
| 2025 | $5.4B | — | — | — | Actual |
| 2026 | $5.7B | $5.9B | $6.1B | 25 | Estimate |
| 2027 | $5.9B | $6.2B | $6.6B | 25 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $183.37 | Range $145–$210
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| John Glass | Morgan Stanley | Buy | $207 | +49.3% |
| Christine Cho | Goldman Sachs | Strong Buy | $200 | +44.2% |
| John Ivankoe | JP Morgan | Buy | $190 | +37.0% |
| Dennis Geiger | UBS | Strong Buy | $190 | +37.0% |
| Jon Tower | Citigroup | Strong Buy | $186 | +34.1% |
| Christopher Carril | KeyBanc | Buy | $177 | +27.6% |
| Jeffrey Bernstein | Barclays | Hold | $175 | +26.2% |
| Andy Barish | Jefferies | Hold | $175 | +26.2% |
| Andrew Charles | TD Cowen | Strong Buy | $170 | +22.6% |
| Brian Mullan | Piper Sandler | Hold | $166 | +19.7% |
(e) Confidence Band Commentary
Analyst coverage is robust with 21 analysts, 8 Strong Buy / 7 Buy / 6 Hold. Consensus is firmly bullish — the lowest PT is $145, implying 4.6% upside from current levels. EAT has beaten EPS estimates in all 4 recent quarters, often by 10%+. The wide PT range ($145–$210) reflects uncertainty about whether the margin expansion is sustainable or near peak. The "Hold" ratings tend to reflect valuation concern (already pricing in turnaround success) rather than fundamental bearishness. Key risk: same-store sales deceleration from current 6–8% growth rates.
💡 Investment Thesis
- Operating leverage inflection: Chili's has gone from 3.5% operating margin to ~10% in two years — menu simplification, labor productivity, and traffic gains are all contributing simultaneously. This is the classic Stage 4 "Operating Leverage" setup where revenue growth is modest but profit growth is explosive.
- Category outperformance: Chili's is gaining 4–6% same-store sales while the casual dining industry is flat to declining. The "3 For Me" value platform and chicken sandwich launch are drawing traffic from competitors.
- Share buyback engine: Brinker has reduced shares from 58.7M (2016) to 42.9M (TTM) — a 27% reduction. FY2025 buybacks accelerated to $90M with authorization for more. This is a durable capital return program funding significant per-share amplification.
- Bear case risk — margin mean-reversion: Restaurant margins are structurally thin and cyclical. Wage inflation, commodity spikes, or a consumer recession could reverse the margin gains. The current 10% operating margin may be close to peak for this business.
- Valuation tension: At 17.7× TTM EPS and 12.8× forward EPS, the stock is pricing in continued turnaround success. Any deceleration in same-store sales or margin expansion would hit the multiple hard.
👔 Management Quality & Culture
CEO: President Kevin · Tenure: Since 2022 (~4 yrs)
Net Insider Buys (12m)
-113,447 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Brinker International, Inc. - Governance - Board of Director
Restaurant Support Center 3000 Olympus Blvd Dallas, TX 75019 (972) 980-9917 Send Email
Restaurant Support Center 3000 Olympus Blvd Dallas, TX 75019 (972) 980-9917 Send Email
Brinker International
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Brinker International - Wikipedia
In November 2012, Brinker announced the election of Wyman Roberts as CEO and President of Brinker International, and President of Chili's Grill & Bar, effective January 1, 2013. He served in this role until his retirement i
In November 2012, Brinker announced the election of Wyman Roberts as CEO and President of Brinker International, and President of Chili's Grill & Bar, effective January 1, 2013. He served in this role until his retirement i
Capital Allocation & Strategy
Brinker International, Inc. - Investor Relations
Brinker International, Inc. (NYSE: EAT) is one of the world’s leading casual dining restaurant companies and home of Chili’s® Grill & Bar and Maggiano’s Little Italy®. Founded by Norman Brinker in Dallas, Texas, we’ve ventured far from
Brinker International, Inc. (NYSE: EAT) is one of the world’s leading casual dining restaurant companies and home of Chili’s® Grill & Bar and Maggiano’s Little Italy®. Founded by Norman Brinker in Dallas, Texas, we’ve ventured far from
Brinker International, Inc. (EAT) Leadership & Management Te
Learn about Brinker International, Inc. (EAT) stock's management team. Comprehensive performance, salary and tenure analysis for the CEO, board and leadership team.
Learn about Brinker International, Inc. (EAT) stock's management team. Comprehensive performance, salary and tenure analysis for the CEO, board and leadership team.
Employee Ratings
Overall Rating
3.9/5 ★★★★☆
Reviews
,
Culture Signal
Positive
✅ Strengths
- great culture
- recommend
Employee Review Excerpts
Brinker International Reviews (145): Pros & Cons of Working
May 18, 2025 · Finance director · Former employee · Coppell, TX · Recommend · CEO approval · Business Outlook · Pros · Great culture. Fast pace and collaborative work environment. Cons · Multiple perks that are used to make
May 18, 2025 · Finance director · Former employee · Coppell, TX · Recommend · CEO approval · Business Outlook · Pros · Great culture. Fast pace and collaborative work environment. Cons · Multiple perks that are used to make
Brinker International "great people" Reviews | Glassdoor
How satisfied are employees working at Brinker International?65% of Brinker International employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Brinker International 3.9 out of 5 for work life
How satisfied are employees working at Brinker International?65% of Brinker International employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Brinker International 3.9 out of 5 for work life
Brinker International - Chilis Bar & Grill | Glassdoor
Brinker International · Add a Review · About · 510 · Reviews · 13 · Jobs · More · Overview · Company Overview · Locations · FAQ · 510 · Reviews · 13 · Jobs · 593 · Salaries · 42 · Interviews · 85 · Benefits · 14 · Photos · Follow+Add a Revi
Brinker International · Add a Review · About · 510 · Reviews · 13 · Jobs · More · Overview · Company Overview · Locations · FAQ · 510 · Reviews · 13 · Jobs · 593 · Salaries · 42 · Interviews · 85 · Benefits · 14 · Photos · Follow+Add a Revi
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Accumulate — Brinker International (EAT)
Current price: $138.68 | Analyst Avg PT: $183.37
$83
🔴 Bear
$169
📊 Base
$295
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$156 | Begin position |
| Tier 2 — Add | ≤$126 | Add on weakness |
| Tier 3 — Full | ≤$79 | Full allocation |
| Sell Alert | ≥$250 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Verdict: Hold. Brinker's turnaround is genuine and impressive — operating margins have tripled in two years, traffic is growing, and the buyback program amplifies EPS. However, the stock at $138.68 is already pricing in most of the upside: analyst consensus at $183 suggests ~32% upside, but our base DCF value of ~$182 is essentially in line with consensus, and the current price sits at 76% of fair value. The risk/reward is balanced here — not enough margin of safety to accumulate aggressively, but the thesis is intact. Wait for a pullback toward $120–130 before adding.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 57 |
| Average Cost Basis | $176.98 |
| Current Market Value | $7,905 |
| Unrealized P&L | $-2,183 (-21.6%) |
| Annual DPS | — (not provided) |
| Annual Dividend Income | — (DPS missing) |
| Current Yield (at price) | — |
| Yield on Cost | — |
| vs Target (~$200K) | $7,905 / $200,000 (4%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base | Used FY2025 FCF of $414M (not TTM $504M, which includes favorable working capital timing in Q3 FY2026). The FY2025 figure represents a more normalized turnaround run-rate. TTM FCF inflated by ~$90M of working capital benefit and Q3 seasonal strength. |
| WACC | Ke = 4.30% + 1.335 × 5.5% = 11.64%. Beta of 1.335 reflects higher volatility than the sector. Kd = 3.2% × (1 − 16.5%) = 2.67%. WACC = 78.0% × 11.64% + 22.0% × 2.67% = 9.67%. |
| Operating Leverage | The key thesis driver. EAT's operating margin went from 3.5% (FY2023) to 9.5% (FY2025) to ~10.4% (TTM). This is not just cost cutting — it's revenue leverage on a simplified menu with better unit economics. Our FCF margin assumptions (8.5%→9.5%) are conservative relative to the current trajectory but prudent given restaurant cyclicality. |
| Share Count Reduction | Shares reduced from 58.7M (2016) to 42.9M (TTM), a 27% reduction. This amplifies EPS growth by ~7pp over FY2023→2025. Buyback pace has reaccelerated: FY2025 $90M, FY2026 TTM already $347M (includes a large accelerated buyback in Q3). We assume buybacks continue but moderate to ~$100–150M/year going forward. |
| No Dividend | EAT suspended its dividend in 2020 ($0.38/qtr) and has not reinstated it. All capital return goes through buybacks. This makes DDM inappropriate — DCF (FCFF) is the correct model since we value total firm cash flows regardless of distribution form. |
| Sanity Check | Base IV of ~$182 vs analyst consensus PT of $183.37 — within 1% (well within the ±20% band). P/E of ~17× on FY2026 EPS of $10.86 is reasonable for a turnaround name with demonstrated momentum. EV/EBITDA of ~10.7× is below the peer median of ~14×, reflecting the higher leverage and more volatile earnings profile. |
| Terminal Growth | Base terminal growth of 2.5% assumes EAT grows slightly above GDP long-run, reflecting modest unit expansion (Maggiano's) plus inflation. Bear terminal of 2.0% assumes the turnaround fades and EAT reverts to mature-casual-dining growth. Bull terminal of 3.0% assumes sustained market share gains and international expansion. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.