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Brinker International, Inc. Is a Trending Stock: Facts to Know Before Betting on It

Brinker International (NYSE: EAT) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term. Over the past month, shares of this operator of restaurant chains Chili's Grill & Bar and Maggiano's Little Italy have returned +28.5%, compared to the Zacks S&P 500 composite's +5.1% change. During this period, the Zacks Retail - Restaurants industry, which Brinker International falls in, has lost 4.2%. The key question now is: What could be the stock's future direction? Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Earnings Estimate Revisions Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings. We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and ...