Measuring Darden Restaurants, Inc.'s (NYSE:DRI) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess DRI's recent performance announced on 24 November 2019 and compare these figures to its historical trend and industry movements.
Commentary On DRI's Past Performance
DRI's trailing twelve-month earnings (from 24 November 2019) of US$631m has declined by -7.0% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 25%, indicating the rate at which DRI is growing has slowed down. Why could this be happening? Let's examine what's occurring with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Darden Restaurants has invested its equity funds well leading to a 28% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 7.0% exceeds the US Hospitality industry of 6.0%, indicating Darden Restaurants has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Darden Restaurants’s debt level, has declined over the past 3 years from 20% to 11%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I suggest you continue to research Darden Restaurants to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DRI’s future growth? Take a look at our free research report of analyst consensus for DRI’s outlook.
- Financial Health: Are DRI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 24 November 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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