Darden Restaurants Hits High On Tasty Earnings, Guidance
Darden Restaurants blew past fiscal third-quarter earnings forecasts and gave bullish guidance, sending shares higher Friday.
The parent of Olive Garden, Longhorn Steakhouse and other full-service restaurants earned 99 cents a share minus one-time items, a 21% jump vs. a year earlier. Analysts had expected 84 cents for the Feb. 22-ended quarter. Without adjustments, EPS was $1.01.
Net income was $133.8 million vs. $109.7 million a year earlier.
Sales fell 23% to $1.73 billion, just above views of $1.72 billion.
For Q4, Darden (DRI) expects adjusted EPS of 91-94 cents, above Wall Street's 89-cent target.
Darden shares rose 2.8% to 66.77 Friday after climbing to a fresh record high of 67.74.
Under pressure from activist investors, Darden sold its ailing Red Lobster chain for $2.1 billion last July. The Starboard hedge fund, which sought bigger changes, led a board makeover, resulting in 12 new directors.
CEO Eugene Lee came in as interim CEO last fall and took the reins permanently in February.
Darden shares are up 52.5% from a mid-July low.
Lower gas prices have helped lift restaurant stocks overall. The Retail-Restaurant group is No. 10 out of IBD's 197 industries.
Olive Garden sales grew 3% to $957 million in the quarter, and it added a net nine locations for the Italian-themed chain. Sales rose 11.3% to $404 million at Longhorn Steakhouse, which added 25 restaurants. Specialty Restaurants revenue rose 14.7% to $367 million, and the segment added a net 16 restaurants.
Total restaurant count at the end of Q3 rose 3% to 1,528.
Darden's reorganization to boost shareholder returns continues, including a possible sale or spinoff of real estate holdings.
"We're still evaluating our real estate very, very carefully."
