Bloomin’ Brands Stock Plummets Despite Earnings Beat

Despite reporting better-than-expected quarterly earnings, Bloomin’ Brands shares are experiencing significant downward pressure. Market researchers have assigned the stock a “Strong Sell” rating, with continuous downward revisions to profit estimates creating concerning signals for investors.

Analyst Pessimism Overshadows Quarterly Performance

The restaurant chain operator delivered adjusted earnings per share of $0.32 for the second quarter, surpassing the $0.28 consensus estimate. This 17% positive surprise represents the fourth consecutive quarter where Bloomin’ Brands has exceeded expectations. Revenue showed modest improvement, climbing to $1 billion.

However, the market response has been decidedly negative, with the stock currently holding a Zacks Rank of #5 (Strong Sell). The primary driver appears to be reduced earnings projections: estimates for the current fiscal year have been trimmed from $1.06 to $1.03 per share, while next year’s forecast has dropped from $1.02 to $0.98. These negative revisions are directly contributing to the poor ranking.

Operational Headwinds and Margin Compression

Beneath the surface earnings beat, operational metrics reveal significant challenges. Comparable restaurant sales in the United States declined by 0.1%, while traffic numbers dropped by a substantial 2.0%. Although these figures exceeded internal expectations, they still lagged behind industry averages.

The margin picture appears even more concerning:
* Adjusted operating margins contracted sharply from 6.0% to 3.5%
* Rising labor, ingredient and operational expenses due to inflationary pressures
* Increased insurance expenditures
* Unfavorable product cost structure

In response, management is implementing cost-saving initiatives and evaluating its restaurant portfolio, with particular focus on the Outback Steakhouse brand.

Should investors sell immediately? Or is it worth buying Bloomin' Brands?

Leadership Changes and Diminished Outlook

On October 13, W. Michael Healy, Executive Vice President for Strategy and Transformation, departed the company. The separation was reported as amicable, with no disagreements regarding corporate policies cited.

Simultaneously, management revised its 2025 guidance downward, now projecting adjusted earnings between $1.00 and $1.10 per share—significantly below the previous consensus expectation of $1.23. This marks the second substantial guidance reduction within just four quarters.

For the upcoming third quarter, Bloomin’ Brands anticipates reporting a loss between $0.15 and $0.10 per share. U.S. comparable sales are projected to range from flat to a 1.0% decline. The combination of operational difficulties and reduced forward guidance suggests continued challenges for the restaurant operator.

Cautious Analyst Sentiment Prevails

Market experts remain cautious in their assessment. The consensus rating among eleven analysts stands at “Reduce,” with four recommending “Sell” and seven advising “Hold.” Alternative surveys show 75% recommending holding positions, 13% advocating selling, and another 13% recommending strong sells.

Significant disparities exist in price targets:
* The average 12-month price target sits at $9.88
* Other estimates cluster between $7.30 and $7.58
* Goldman Sachs established a target of just $6.50 in August

Given these conflicting signals and fundamental challenges, investors are questioning whether Bloomin’ Brands shares can mount any meaningful recovery in the foreseeable future.