Consumer Dining Trends Point to Ongoing Strong Returns Here

Fast food restaurant

Consumers have shifted tastes in recent years, spending less on goods and more on experiences such as travel and vacations. Part of that shift also includes a trend towards dining out more often.

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  • While there have been some worries about a slowdown in consumer dining, the latest earnings suggest that isn’t a worry. Customers continue to go out to dine, with many restaurant franchises benefiting from the ongoing spending.

    That includes Brinker International (EAT), owner of chains such as Chili’s.

    The company’s offerings are hitting the right price point to keep customers coming back again and again, as evidenced by Brinker raising its full-year guidance and sales for the second quarter in a row.

    Thanks to these strong numbers, Brinker has managed to grow revenues by 13% over the past year, and earnings have soared a massive 435%.

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  • Action to take: Shares trade at about 25 times forward earnings, making them ideal for growth and momentum investors rather than value investors now.

    Investors may want to buy a partial stake now, and use any market pullbacks to add to that position. Currently, Brinker does not pay a dividend.

    For traders, with shares soaring higher and strong earnings, the April $200 calls, last trading for about $7.00, could see mid-double-digit returns from here.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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