In a concerted effort to enhance shareholders’ value, the board of directors of Brinker International Inc. (EAT), authorized an additional $250 million for its current share repurchase program. The program has no expiration date.
Brinker, which operates Chili’s Grill & Bar and Maggiano’s Little Italy restaurants, repurchased 4.5 million shares for $107.1 million in the recently concluded third quarter. The company had $258 million remaining under its current authorization as of March 30, 2011.
The Dallas, Texas-based company remains committed to building shareholders’ value and return cash to shareholders through share repurchases or dividends. Previously, in November 2010, Brinker authorized an additional $325 million in shares repurchases.
Brinker also declared a quarterly dividend of 14 cents per share to be paid on June 30, 2011, to stockholders of record as of June 17, 2011. The company increased its quarterly dividend by 27% to 14 cents per share on March 26, 2010, with the intention of bolstering shareholder value.
Further, Brinker has strong liquidity to support share buyback. At the end of third quarter, the company had cash and cash equivalents of $106.9 million. The company also reduced its long-term debt less current installments by $5.4 million sequentially to $508.1 million.
We believe the company generates sufficient free cash flow from its financial discipline and hence, is well positioned to execute share repurchases aggressively. Moreover, an increase in the share buy back authorization affirms the company’s optimistic outlook and indicates that it is heading toward strong future growth.
One of the company’s peers, Yum! Brands Inc (YUM), consistently enhances shareholders’ returns. Since 2004, the company has returned more than $7 billion through dividends and share repurchase programs. In January 2011, the company announced an additional $750 million share buy back authorization for the next 18 months.
Brinker currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
BRINKER INTL (EAT): Free Stock Analysis Report
YUM! BRANDS INC (YUM): Free Stock Analysis Report
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