It’s the time to EAT?

Most of people probably have never heard about the company name I’m talking about, Brinker International. But a lot of people are actually the customers of the company without knowing it. Do you know Chili or Maggiano’s Little Italy restaurants? I’m this sounds very familiar to many of you, right? I have never dinned in either of them but have seen Chili everywhere along the ways I pass. Binker with a stock symbol of EAT is the owner of the restaurants. Actually Brinker is one of leading causal-dining companies in the world. It owns or franchises close to 2000 Chili’s and Little Italy restaurants with operations in over 30 countries! In other words, this is a very well established dining company. But as with many good companies, it has run into some rough patch in the past few years. Since the financial crisis in 2008 with increasing financial challenges facing most of people, causal-dining customers tend to cut down their eating habits in more formally served restaurants like Chili or Little Italy but more go to fast foods like McDonald or Wendy. As such, it same-store sales have declined for many quarters in the roll.  Accordingly, its share price has declined over 30% from its peak two years ago.

 

But here is the thing. If you are not looking for short term return but rather a long term investor, values of good companies can only be found when they are facing short-term difficulties. The management of Brinker is not just sitting idle for the challenges. Rather they are actively working on something to improve their operations, e.g. offering value meals such as a three-course dinner for $10,  and they are also adapting to the trend by enhancing its online ordering process to boost its takeout business. A little secret not known by many investors is that close to 20% of their restaurants are located in oil-producing regions. The past few years have definitely been touch for these regions but with a good chance of recovering in the oil sector in the next few years, more people there will EAT again in Chili’s or Little Italy I think. Another gem Brinker has is its real estate holdings, which is definitely a good valuable asset adding to its fundamentals. With its price at low $40s, I think EAT is a good value stock for long term. It is also a very good dividend growing stock with a current yield of 3%+ at the moment and the company is aggressively buying back its own stock, a great piece of music to my ear! I think it is the time to EAT!!