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Here's How Darden (DRI) Looks Just Ahead of Q1 Earnings

Zacks Equity Research
·4 mins read

Darden Restaurants, Inc. DRI is scheduled to report first-quarter fiscal 2021 results on Sep 24, 2020, before the opening bell. In the last-reported quarter, the company delivered a earnings surprise of 25.3%.

How Are Estimates Placed?

The Zacks Consensus Estimate for the fiscal first-quarter bottom line is pegged at 5 cents per share, indicating a decline of 96.4% from earnings of $1.38 reported in the year-ago quarter. For revenues, the consensus mark stands at $1,527 million, suggesting a decrease of 28.4% from the year-ago figure.

Let's take a look at how things have shaped up in the quarter.

Darden Restaurants, Inc. Price and EPS Surprise

Darden Restaurants, Inc. Price and EPS Surprise
Darden Restaurants, Inc. Price and EPS Surprise

Darden Restaurants, Inc. price-eps-surprise | Darden Restaurants, Inc. Quote

Factors at Play

The coronavirus pandemic is likely to have materially affected Darden’s fiscal first-quarter performance. The coronavirus pandemic has been persistently hurting same-restaurant sales.

On Jun 25, the company provided a business update whereby same-store sales through the first three weeks (ended Jun 21, 2020) declined 33.2% from the prior year period. Notably, for the weeks ended Jun 7, Jun 14, and Jun 21, same-restaurant sales were down 38.7%, 31.8%, and 29.6%, respectively. Moreover, for the fiscal first quarter to date through Jun 21, same-restaurant sales were down 31.3%, 24.3%, 48.1% and 42.3% at Olive Garden, LongHorn Steakhouse, Fine Dining and Other Business, respectively.

The Zacks Consensus Estimate for sales at Olive Garden, Fine Dining, and LongHorn Steakhouse is pegged at $818 million, $80 million and $364 million, indicating a year-over-year decline of 25%, 41.2% and 19.1%, respectively. Moreover, the same for Other business stands at $249 million, suggesting a decrease of 45.5% from the prior-year quarter.

Nonetheless, continuous focus on digital platforms coupled with streamlining of operations and menu modifications is likely to have aided the top line in the to-be-reported quarter.

What Our Model Says

Our proven model predicts an earnings beat for Darden this time around as a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates.

Earnings ESP: Darden has an Earnings ESP of +69.08%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

McDonald's Corporation MCD reported mixed second-quarter 2020 results, wherein the bottom line missed the Zacks Consensus Estimate but the top line beat the same. The company reported adjusted earnings of 66 cents per share, which missed the consensus of 76 cents. Moreover, the bottom line declined 68% year over year. In the second quarter, revenues of $3,761.5 million surpassed the Zacks Consensus Estimate of $3,698 million.

Starbucks Corporation SBUX reported solid third-quarter fiscal 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate. In the quarter under review, the company reported adjusted loss per share of 46 cents per share, narrower than the Zacks Consensus Estimate of a loss of 61 cents. In the prior-year quarter, the company reported adjusted earnings per share of 78 cents. Total revenues were $4,222.1 million, which beat the Zacks Consensus Estimate of $4,111 million. However, the top line fell 38.1% from the year-ago quarter’s level.

YUM! Brands, Inc. YUM reported robust second-quarter 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. The company’s adjusted earnings of 82 cents beat the Zacks Consensus Estimate of 52 cents. In the prior-year quarter, the company reported adjusted earnings of 93 cents. YUM! Brands’ total revenues of $1,198 million declined 9% year over year but outpaced the consensus estimate of $1,168 million.

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Starbucks Corporation (SBUX) : Free Stock Analysis Report
 
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