Brinker Reports Robust 4Q, but Even With Recent Market Pullback, Shares Are Fairly Valued

Brinker International EAT presented solid fourth-quarter results reflecting continued strong comparable-store sales and solid operating margins. The margin expansion exceeded our already optimistic assumptions, and we plan to raise our fair value estimate modestly to account for this, along with management's robust outlook for the coming year. For fiscal 2012, the firm expects revenue to be up 2%-3% and operating margins to expand 50 basis points, leading to earnings per share of $1.80-$1.95. With operating margin expansion and the reduction in shares from share-repurchase activity, we believe this EPS target is attainable and will adjust our model accordingly. We believe the shares are currently fairly valued.