Has The Market Fully Reflected Brinker International (EAT) After Strong Multi‑Year Share Gains

Simply Wall St.02-08 23:06

If you are wondering whether Brinker International's current share price still offers value, this article will walk through what the numbers say and how that lines up with the story around the stock. ...

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The shares most recently closed at US$168.93, with returns of 7.1% over the last 7 days, 5.6% over the last 30 days, 11.5% year to date, a 1.8% decline over the past year and a very large 3 year gain alongside a 152.9% 5 year return. Recent market attention has been shaped by ongoing updates around the business and the broader consumer services sector, which have kept investors focused on how resilient restaurant chains can be in different trading conditions. These developments help explain why the share price has seen meaningful moves in shorter time frames while the longer term picture looks quite different. On our valuation checklist, Brinker International scores 5 out of 6 for being undervalued. You can see the full breakdown in our valuation score of 5/6. Next we will walk through the main valuation methods behind that result and then finish with a way to assess value that ties the numbers back to the wider investment story.  Brinker International delivered -1.8% returns over the last year. See how this stacks up to the rest of the Hospitality industry. AdvertisementApproach 1: Brinker International Discounted Cash Flow (DCF) Analysis A Discounted Cash Flow, or DCF, model takes estimates of the cash a business could generate in the future and discounts those cash flows back to today, aiming to arrive at an intrinsic value per share. For Brinker International, the model starts with last twelve month Free Cash Flow of about $477 million, then uses analyst forecasts and extrapolated estimates to project cash flows out over the next decade. For example, projected FCF is $479.5 million in 2026 and $716.1 million in 2035, with interim years stepping up between those points. All of these figures are in $ and are below 1b, so the analysis uses values in the hundreds of millions. Using a 2 Stage Free Cash Flow to Equity approach, those future cash flows are discounted back to today to give an estimated fair value of about $218.62 per share. Compared with the recent share price of $168.93, the DCF output implies the stock trades at roughly a 22.7% discount, which suggests it is undervalued on this model alone. Result: UNDERVALUED Our Discounted Cash Flow (DCF) analysis suggests Brinker International is undervalued by 22.7%. Track this in your watchlist or portfolio, or discover 52 more high quality undervalued stocks. EAT Discounted Cash Flow as at Feb 2026 Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Brinker International. Approach 2: Brinker International Price vs Earnings For a profitable company like Brinker International, the P/E ratio is a useful way to think about value, because it links what you pay for each share with the earnings that business is currently generating. Investors usually expect a higher P/E where they see stronger earnings growth potential or lower perceived risk, and a lower P/E where growth expectations are more modest or risks are higher. Right now, Brinker International trades on a P/E of 16.20x. That is below the Hospitality industry average P/E of 22.01x and also below the broader peer average of 40.31x. Simply Wall St’s Fair Ratio for the company is 19.06x. This is the P/E level its model suggests could be reasonable given factors such as earnings growth profile, profit margins, industry, market cap and specific risk characteristics. This Fair Ratio is more tailored than a simple comparison with peers or the sector. It tries to adjust for the fact that not all Hospitality stocks have the same growth outlook, risk or profitability. Comparing Brinker International’s current 16.20x P/E with the 19.06x Fair Ratio points to the shares trading below that model estimate. Result: UNDERVALUED NYSE:EAT P/E Ratio as at Feb 2026 P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 22 top founder-led companies. Upgrade Your Decision Making: Choose your Brinker International Narrative Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way for you to attach your own story about Brinker International to the numbers behind its fair value, revenue, earnings and margins. A Narrative is your view of what the business is doing, how its restaurants compete and what that might mean for future financials, all pulled together into a forecast that leads to a fair value you can compare with today’s share price. On Simply Wall St, Narratives sit inside the Community page and are easy to use, helping you evaluate whether you think the stock is priced attractively by lining up your Fair Value against the current Price and then updating that view automatically when new news or earnings data arrives. For example, one Brinker International Narrative might assume stronger revenue growth and higher margins and so arrive at a higher fair value. Another might assume more modest growth and tighter margins and therefore point to a lower fair value, giving you a clear sense of how different perspectives translate into different price opinions. Do you think there's more to the story for Brinker International? Head over to our Community to see what others are saying! NYSE:EAT 1-Year Stock Price Chart  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.Valuation is complex, but we're here to simplify it.Discover if Brinker International might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. 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