|Bid||19.83 x 800|
|Ask||19.84 x 2200|
|Day's Range||19.73 - 20.03|
|52 Week Range||16.30 - 25.00|
|PE Ratio (TTM)||17.27|
|Earnings Date||Nov 1, 2018 - Nov 5, 2018|
|Forward Dividend & Yield||0.36 (1.77%)|
|1y Target Est||23.33|
On September 20, Darden Restaurants (DRI) was trading at $71.12. On the same day, 56.0% of the 25 analysts that follow Darden Restaurants favored a “buy” rating, while 44.0% favored a “hold” rating. Since the announcement of Darden Restaurants’ earnings for the first quarter of fiscal 2019, Canaccord Genuity, Stifel, Jefferies, and Maxim have all raised their price targets.
Despite BMO Capital’s downgrade on September 24, Darden Restaurants’ (DRI) stock price rose 0.4% and closed the day at $113.28.
During the first quarter of fiscal 2019, Darden Restaurants (DRI) posted earnings per share of $1.32. However, removing special or one-time items, the company’s adjusted EPS stood at $1.34, outperforming analysts’ EPS expectations of $1.24. Year-over-year, the company’s EPS grew by 35.4% from $0.99 in the first quarter of fiscal 2018.
On September 24, BMO Capital downgraded Darden Restaurants (DRI) from “market perform” to “underperform” due to concerns about food commodity deflation. As reported by MarketWatch, Andrew Strelzik of BMO Capital expects the SSSG (same-store sales growth) to deaccelerate across the casual dining industry from the beginning of fourth quarter due to the widening gap between consumers eating food at home and eating out. The gap is a result of food commodity deflation. Strelzik also lowered his target price for Darden from $105 to $96.
During the first quarter of fiscal 2019, Darden Restaurants (DRI) posted EBIT (earnings before interest and tax) of $189.1 million, which represents an EBIT margin of 9.2%. The company’s EBIT margin stood at 9.3% in the first quarter of fiscal 2018.
BMO Capital Markets analysts downgraded a number of restaurant company stocks, including Olive Garden parent Darden Restaurants Inc. and Outback parent Bloomin' Brands Inc. , based on "decelerating industry trends" and commodity deflation. Olive Garden just reported better-than-expected same-store sales in the most recent quarter, but BMO analysts are concerned about the impact commodity prices could have on Longhorn Steakhouse. Analysts expressed the same concern about Outback, Brinker International Inc.'s Chili's brand, Texas Roadhouse Inc. and Chuy's Holdings Inc. . "We are shifting to a more cautious view of casual dining as industry comp trends likely will decelerate beginning in 4Q18, driven by a widening food-at-home/food-away-from-home price gap," BMO wrote. Darden was downgraded to underperform from market perform with a price target cut to $96 from $105. The stock is down 0.3% in Monday trading, and up 17.3% for the year to date. Bloomin' Brands was downgraded to market perform from outperform with a price target cut to $21 from $28. Shares are down 4.3% in Monday trading, and are down 9.8% for the year to date. Brinker International was downgraded to underperform from market perform with its price target slashed to $40 from $43. Brinker shares are down nearly 4% in Monday trading, but up 18.7% for 2018 to date. Texas Roadhouse was downgraded to underperform from market perform with a price target decrease to $58 from $62. Texas Roadhouse stock is down 5.2% in Monday trading, but up nearly 27% for the year so far. And Chuy's was downgraded to underperform from market perform with the price target lowered to $23 from $28. Chuy's shares have sunk 9.2% on Monday, and have fallen 11.6% for the year to date. The S&P 500 index has gained 9% for 2018 so far.
By the end of the first quarter of fiscal 2019, Darden Restaurants (DRI) operated 1,753 restaurants: Olive Garden: 858 LongHorn Steakhouse: 506 Cheddar’s Scratch Kitchen: 157 Yard House: 73 The Capital Grille: 58 Bahama Breeze: 40 Seasons 52: 42 Eddie V’s: 19
For the first quarter of fiscal 2019, Darden Restaurants (DRI) posted overall SSSG (same-store sales growth) of 3.3%, outperforming analysts’ expectations of 1.1%. Of Darden’s eight brands, six have posted positive SSSG figures. In this article, we’ll examine the performance of Darden Restaurants’ brands.
In the first quarter of fiscal 2019, Darden Restaurants (DRI) posted revenues of $2.06 billion, outperforming analysts’ expectations of $2.03 billion. Year-over-year, the company’s revenues have increased 6.5%. The addition of 52 new restaurants in the last four quarters contributed 3.2% of its revenue growth, while its SSSG (same-store sales growth) has added 3.3%.
Darden Restaurants (DRI) posted its earnings for the first quarter of fiscal 2019 before the market opened on September 20. The company posted adjusted EPS of $1.34 on revenues of $2.06 billion. Year-over-year, the company’s EPS has increased by 35.4%, while its revenues grew by 6.5%.
Of the 26 analysts that follow Darden Restaurants (DRI), 53.8% have recommended “buys” on its stock as of September 14, while the remaining 46.2% have recommended “holds.” No analysts have given the stock “sell” recommendations. On average, analysts have set a target price of $119.15 on the stock as of the same day.
For our valuation analysis of Darden Restaurants (DRI), we’ve opted to consider its forward PE multiple due to the high visibility of its future earnings. Darden’s strong fiscal fourth-quarter earnings results and the optimistic outlook set by its management have led to an increase in its stock price and its valuation multiple.
Analysts expect Darden Restaurants (DRI) to post EPS of $1.24 in the first quarter of fiscal 2019, a rise of 25.3% from its EPS of $0.99 in the corresponding quarter of fiscal 2018. This EPS growth will likely be driven by revenue growth, the expansion of its net margin, and share repurchases. Analysts expect Darden’s net margin to expand from 6.5% in the fiscal first quarter of 2018 to 7.5% in the fiscal first quarter of 2019.
For the fiscal first quarter of 2019, analysts expect Darden Restaurants (DRI) to post revenue of $2.03 billion, a rise of 5.0% from $1.94 billion in the corresponding quarter of the previous year. This revenue growth will likely be driven by the addition of new restaurants and positive SSSG (same-store sales growth). Compared to its fiscal first quarter of 2018, Darden operated nine more Olive Garden restaurants, 13 more LongHorn Steakhouse restaurants, 15 more Cheddar’s Scratch Kitchen restaurants, four more Yard House restaurants, two more Capital Grille restaurants, one more Bahama Breeze restaurant, and one more Eddie V’s restaurant at the end of the fiscal fourth quarter of 2019.
On September 14, Darden was trading at $119.05, a rise of 27.6% since its announcement of its earnings results for the fiscal fourth quarter of 2018 on June 21. In its earnings for the fiscal fourth quarter of 2018, Darden posted adjusted EPS of $1.39, outperforming analysts’ consensus expectation of $1.35. After its earnings release, Darden’s management set an optimistic outlook.
Goldman Sachs’s upgrade appears to have increased investors’ confidence, leading to a rise in Darden Restaurants’ (DRI) stock price. On September 11, Darden hit a new 52-week high of $120.93 before closing the day at $119.28, which represents a rise of 0.6% from its previous day’s closing price.
On September 11, Goldman Sachs upgraded Darden Restaurants (DRI) from “neutral” to “buy,” and also raised its price target from $106 to $130, which represents a return potential of 8.9% from its current stock price of $119.38. Karen Holthouse of Goldman Sachs is optimistic about the restaurant sector and expects the increase in consumer spending to drive restaurants’ sales higher in the second half of 2018. Despite the risks of the increase in labor and delivery costs, Holthouse is optimistic about Darden due to the expectation of strong sales from its off presence business such as takeout and delivery.
Goldman Sachs has a good feeling about the dining sector. “We are optimistic on restaurants’ top-line trajectory through 2H18, and see no historical precedent for a rapid reversal from new all-time highs ...
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