Shares of Brinker International (EAT) are up 1% to trade at $166.25 last check, somewhat distant from their Feb. 4 record peak of $192.22. Although the restaurant chain rallied off its April 7 pullback, it’s been unable to break out and remain above $180. The security still sports a 25.8% year-to-date lead, however, and could soon erase more of these recent losses thanks to a historically bullish trendline.
According to Schaeffer’s Senior Quantitative Analyst Rocky White, EAT is within one standard deviation of its 80-day moving average. Shares were above this this trendline in at least eight of the last 10 trading days, and spent 80% of the past two months above it. Within these parameters, five other signals occurred over the past three years, after which the stock was higher one month later 80% of the time, averaging a 11.6% gain. Should a move of similar magnitude happen, the shares would land near $185.53, much closer to record highs.
EAT currently sports a short interest float of 13.7%, indicating it could see a squeeze. Heading into today, 14 of the 18 covering brokerages carry a “hold” recommendation, leaving ample room for bull notes, should this bearish sentiment begin to unwind.
Options are looking affordable, per EAT’s Schaeffer’s Volatility Index (SVI) of 58%, which ranks in the low 28th percentile of its annual range. It’s also worth noting that the security has tended to outperform options traders’ volatility expectations, per its Schaeffer’s Volatility Scorecard (SVS) of 76 out of 100.