Brinker International opened Wednesday strong on earnings but fell back from resistance, while Cava Group plunged to a 15-month low.
Chili's parent Brinker reported 21.3% comparable restaurant sales growth and announced a $400 million stock buyback authorization.
Cava's comps grew just 2.1%, far short of roughly 6% estimates. But several analysts defended Cava stock. The Mediterranean fast-casual chain's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) still beat consensus expectations, William Blair analyst Sharon Zackfia noted.
Brinker Earnings
Brinker earnings per share swelled 55% to $2.49 for its fiscal fourth quarter, two cents above estimates. That followed three quarters of triple-digit growth. Revenue climbed 21% to $1.46 billion vs. forecasts of $1.44 billion.
Chili's drove the gains with 23.7% same-restaurant sales growth, while Maggiano's comps backslid 0.4%. Chili's same-restaurant traffic increased 16%, defying a broad fast-casual slowdown. Chili's launched the Big QP at the start of Q4. That's "a burger packed with 85% more beef than a quarter pound burger" for $10.99 with drink and starter. It's part of the "Chili's Better Than Fast Food" campaign.
Brinker CEO Kevin Hochman said in the earnings statement that the quarter provided further confirmation that "Chili's is officially back, baby back!"
"Sustained momentum along with a strong pipeline of initiatives" makes the company confident in its ability to grow sales and traffic in fiscal 2026.
Brinker introduced a fiscal 2026 outlook for EPS of $9.90 to $10.50, with a $10.20 midpoint. FactSet's current forecast is $9.91. The 2026 revenue target of $5.6 billion to $5.7 billion implies roughly 5% growth, a hair above analyst estimates but relatively conservative.
Cava Earnings
Cava posted Q2 earnings of 16 cents a share, 3 cents ahead of forecasts, though down 6% from a year ago. Revenue grew 20% to $280.6 million, about $5 million below the consensus.
William Blair's Zackfia noted that Q2 same-restaurant sales faced some tough comparisons from a year ago, sparked partly by its steak launch last June. Further, some new locations in 2024 saw an initial surge in traffic. That initial "honeymoon" for new Cava restaurants was a new development, Zackfia said, though clearly a positive signal for the brand.
Cava lowered its full-year comparable-store sales growth outlook to 4%-6% from 6%-8%. That builds in 1%-5% growth in the second half of the year, Zackfia said.
Cava raised its outlook for new store openings to 68-70 from 64-68. That equates to growth of around 19%.
Brinker Stock
EAT stock edged up 0.7% to 155.93 in Wednesday morning stock market action. But shares tumbled from 167.79 shortly after the open, hitting resistance just below its 50-day moving average around 168. A decisive move above the 50-day line would flash an early entry opportunity in an emerging base.
Brinker stock's prior breakout attempt at the end of June faltered amid lackluster traffic for the fast-casual sector overall.
Cava Stock
Cava stock dived 16.8% to 70.22, after hitting a 15-month low of 65.70 earlier. Shares are now around 59% off their record high from last November.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
