We recently published a list of 15 Stocks That Outperform the S&P 500 Every Year For the Last 3 Years. In this article, we are going to take a look at where Brinker International, Inc. (NYSE:EAT) stands against other stocks that outperform the broader market.
Imagine choosing a group of stocks that not only weathered the market’s storm but also outpaced its peers. Clearly, a win. Such is the case of these 15 stocks that delivered returns greater than what the market had to offer over the last three years. Before we get down to those top-tier winners, let’s discuss what the broader market index actually is.
This may not be something new to seasoned investors. As one of the most widely known benchmarks of the United States, the S&P Index is considered the best gauge of notable American equities’ performance and the health of the economy, in general. Covering around 80% of market capitalization, the S&P is a float-weighted index, which means that the market capitalizations of all the companies included are adjusted by the volume of shares available for trading publicly. Since it’s an index, you can’t just invest in it directly, but rather you can invest in one of the many funds that use it as a benchmark and measure the overall performance.
As a research report by Alex Frino and David R. Gallagher stated:
“Over long horizons, index funds tracking the index consistently outperform the majority of actively managed funds, reflecting the efficiency of broad-market exposure.”
This highlights that S&P index funds generally deliver better results than most actively managed funds.
If we look at the 5-year trend for the broader market, the index witnessed a growth of around 105%. While this may be a decent growth rate, it’s not something truly amazing. The stocks in the index tumbled in 2022, mainly owing to the FED’s shift in monetary policy, the Russia-Ukraine war, and lingering post-COVID supply chain disruptions. Even after this period, the trendline is not something that would break records or catch an eye. In a span of 3 years, the stocks have witnessed a growth of 32%, which is just decent in this high-growth world.
From energy, agriculture, and finance to gold mining, automotive, technology, and construction industries, the companies have showcased strong returns in a short period. This is a result of favorable macroeconomic policies for these markets, particularly with Trump back in office. The stocks we have favored are the ones featuring good performance in the past, as well as the ones surrounding optimism in the future. Thus, we can safely say that it’s still not too late to invest in these stocks. As the elders used to say, “The best time to plant a tree was 20 years ago. The second-best time is now.”
Our Methodology
We have taken a list of 15 companies from Finviz and Yahoo Finance that have witnessed a growth rate of more than 32%, witnessed by the S&P index funds, over three years. These companies then have been listed in descending order, from the highest growth to the lowest growth. The trend line has been captured from Google’s latest stock prices, with respect to the returns of the respective shares.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A Chili’s Grill & Bar restaurant filled with happy customers enjoying a meal.
Brinker International, Inc. (NYSE:EAT)
3-Year Return as of the Close of March 12: 313%
Brinker International, Inc. (NYSE:EAT) is a global powerhouse for casual dining. The company that owns, operates, and franchises the Chili’s Grill & Bar and Maggiano’s Little Italy restaurant names, has mainly two segments: Chili’s and Maggiano’s. With operations in more than 25 countries, it has indeed come a long way while staying true to its roots. The brand also owns It’s Just Wings, a virtual fast-food restaurant chain selling chicken wings, curly fries, and more. The dining giant considers making people feel special as its passion.
With a market capitalization of $6.67 billion, the EAT stock has witnessed a fantastic growth of about 735% over the last five years. This surge is considered to be Brinker’s big break as the company experienced a downturn in unit performance with EBITDA dripping from $500K to $350K after early 2000s growth.
Everyone knows the casual restaurant industry is one of the most competitive industries. And to survive in such a market, it is important to identify your unique spot. At an investor day event in 2023, the management announced to revisit its strategy, with plans to revitalize the brand with four pillars. We believe 2024 was the year when we could actually see the impact of the focus and execution of this strategy, with a solid 175% jump in returns in the past 12 months.
The forecasts for FY25 show a somewhat similar picture. Analysts expect Brinker International, Inc. (NYSE:EAT) to deliver a consolidated EBITDA of $700 million, which outlines a 19% surge in revenue per unit. For 2026, the estimates show a more subtle gain, with a 4% rise in per-unit sales and 8% EBITDA growth.
As long as Brinker International, Inc. (NYSE:EAT) remains consistent in its efforts to boost revenues through diverse sales-building initiatives, including solidifying its market position, improving food presentation and menu, optimizing food preparation, running successful advertising campaigns, and maintaining market relevance, we have a good reason to believe that this trend will last long.
Overall, EAT ranks 4th on our list of stocks that outperform the broader market. While we acknowledge the potential for EAT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EAT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
