Traders Selling Brinker (EAT) Shares Despite Dividend, Buyback Increase, Raised Guidance

On Friday Brinker International Inc. (NYSE: EAT) raised its quarterly dividend by 27 percent and also boosted its 2010 earnings forecast as recently improving consumer sentiment has the company seeing more traffic at its restaurants.

The raised outlook follows a similar move earlier this week by Brinker’s chief rival, Darden Restaurants Inc. (NYSE: DRI).

Brinker is now forecasting earnings of $1.40 to $1.44 per share for the 2010 fiscal full year, up from the company's previous guidance of $1.15 to $1.30 per share. On average, analysts were expecting $1.39 per share, with estimates ranging from $1.26 to $1.50 per share.

The company also announced that it is raising its quarterly dividend from 11 cents to 14 cents per share and buying back an additional $250 million of common shares.

Brinker continues to project that its earnings will double by 2015 as the company grows internationally. In addition, the company announced late on Thursday that it will sell its On the Border Mexican Grill & Cantina brand to a Golden Gate Capital affiliate. The company plans to use the money from the deal to buy back shares.

Shares of Brinker are down 66 cents per share, or about 3.3%, in late market trading on Friday. The stock last traded at $19.61.

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