Below is a note written by CEO Keith McCullough on why we're adding Brinker International (EAT) to the short side of Investing Ideas today:
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Another way to play the same thing (i.e. real consumer spending #slowing as the Fed reflates the cost of living) is shorting the casual dining names that our Restaurants analyst Howard Penney doesn't like. One of those has a great ticker, EAT. Here's an excerpt from one of Penney's often clairvoyant Institutional Research notes: "We have been saying for months now that the aggressive discounting at Applebee’s is disrupting the Casual Dining industry. One quick example of how the value discussion has changed over the past 12-months occurred on the EAT conference call. During the 2Q18 conference call, the word ‘value’ was mentioned 11 times, and now 12-months later on the 2Q19 call ‘value’ was mentioned 38 times. Driving the value proposition for Chili’s is the 3 for $10 platform and we heard that the program “is a relevant and compelling offer that's sustainable into the foreseeable future.” If this is to be true, what will the margin structure of the company look like going forward?" Short the bounce, KM |
