It’s Time to Bite Into This Earnings Superstar By Lucas Downey, Contributing Editor, TradeSmith Daily Investing shouldn’t be complicated. It’s really a function of two vectors: - Focus your attention on well-run businesses
- Initiate a position at the right time
If you’re able to follow this formula, I believe your odds of success will climb dramatically. Today’s signal study is taking this framework into practice. One company, Brinker International (EAT), just blew away earnings, and the stock catapulted to new heights. But after investor enthusiasm wore off, shares have pulled back quite a bit… And based on history, this is a prime time to take a bite of this stock. Before we dip into hard-hitting evidence, let’s first circle up on the most important characteristic of investing: a well-run business. And Brinker has some of best fundamentals you’ll find in the restaurant category. | Recommended Link | | | | What’s coming could accelerate the global economy by as much as 250 times its normal rate. It also threatens to ruin the financial outlook for millions of Americans. Whether or not you’re an investor, you still need to prepare. Click here for 3 steps to take now. |  | | Brinker Shares Have Been on a Tear A chart tells you a lot about a security. The most important aspect it reveals is the demand picture. When shares are running higher, clearly there’s excitement. EAT has one of the best charts you’ll find, with an incredible 38% return the last three months. The latest rip-and-dip came just after the company blew away sales and earnings expectations. Check it out: 
This pullback doesn’t alarm me one bit simply because of what the company forecasted. Each quarter, companies report their earnings and give a forward estimate that Wall Street pays tremendous attention to. Raise your guidance, and chances are your shares will fly. Lower your guidance, and that’s the kiss of death… surely to sink your stock. EAT finds itself in the former arena because it shattered estimates for its FY 2025 numbers. Write this down – when a company blows past Wall Street’s consensus, that’s a very bullish sign! Brinker, the parent company of popular restaurant chain Chili’s Grill & Bar, raised the bar based on strong consumer trends. For FY 2025, it raised EPS to $7.75/share vs. prior guidance of $5.35 and FactSet estimates of $6.44. Folks, that’s what we call a repricing! Not only did the company raise the bottom-line numbers, it reset the top line too. FY revenue is set to reach $5.2 billion vs. prior guidance of $4.725 billion and FactSet estimates of $4.90 billion. When you focus your investments on companies performing at a high level, you’re stacking the odds in your favor. Couple these fundamental traits with a powerful signal study, and eventually you’ll hit a home run. Let’s chew on a powerful study now! When Brinker Shares Drop 10% or More in Three Days, Buy the Dip What initially drove my curiosity on Brinker shares was the fact that they’ve fallen five days in a row. Each day I’m able to see which names are in uptrends and downtrends. Seeing EAT in a downtrend surprised me, as I remembered how strong the guidance was recently. So, I did a little further investigation. I noticed the three-day performance was elevated at -10%. Turns out, we were able to find 109 prior instances where EAT shares fell 10% or more in that time span. And the evidence says now is a great time to take a bite. Here’s what happens after EAT shares drop 10% or more in three trading days: - Two weeks later, the stock climbs an average of 4%
- One month later, shares jump 7.7%
- Two months later, the stock climbs an average of 23.1%
Eat your heart out: 
That’s a beautiful chart! Now, you shouldn’t expect these gains to play out exactly. What you should expect is to win more than you lose over time by stacking the odds in your favor. Remember, focus solely on high-performing companies like Brinker. And make sure to strike when there’s a powerful, evidence-rich signal! TradeSmith’s software is a great way to sift out the noise and offer up a solid, data-driven menu of fundamentally sound stocks. EAT up! Regards, Lucas Downey
Contributing Editor, TradeSmith Daily P.S. If you think you missed the boat on AI… Think again! The party is just getting started… According to Fortune Business Insights, the AI market hit $233 billion in 2024. But Nvidia CEO Jensen Huang says AI’s next phase is a $100 trillion opportunity. And it all starts now, with AI’s crossover. Louis Navellier – the man who called Nvidia before it soared 37,000% – is here to break down the situation, explain what’s happening, and share details on seven AI Crossover stocks ready to surge 1,000% or more. If anyone knows how to pick stocks, it’s Louis. I’ve known him for years and respect his work a lot. Go here now for details… | 
No comments:
Post a Comment