What Should We Expect From Darden Restaurants, Inc.'s (NYSE:DRI) Earnings In The Years Ahead?
Darden Restaurants, Inc.'s (NYSE:DRI) released its most recent earnings update in July 2019, which signalled that the business gained from a strong tailwind, leading to a double-digit earnings growth of 19%. Below is a brief commentary on my key takeaways on how market analysts predict Darden Restaurants's earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
View our latest analysis for Darden Restaurants
Market analysts' prospects for this coming year seems optimistic, with earnings climbing by a robust 10%. This growth seems to continue into the following year with rates arriving at double digit 16% compared to today’s earnings, and finally hitting US$892m by 2022.
While it is useful to understand the growth year by year relative to today’s figure, it may be more beneficial estimating the rate at which the company is rising or falling every year, on average. The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Darden Restaurants's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 6.9%. This means that, we can presume Darden Restaurants will grow its earnings by 6.9% every year for the next few years.
Next Steps:
For Darden Restaurants, I've compiled three relevant factors you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is DRI worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether DRI is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DRI? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.
