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Darden (DRI) Q3 Earnings & Revenue Miss Estimates, Rise Y/Y
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Darden Restaurants, Inc. (DRI - Free Report) reported third-quarter fiscal 2022 results, with earnings and revenues missing the Zacks Consensus Estimate. The metrics increased on a year-over-year basis. The company stated that the Omicron variant significantly impacted guest demand in January as well as restaurant staffing and operating expenses.
Following the results, the company’s shares declined 1.7% in the pre-market trading session. Negative investor sentiments were witnessed as DRI slashed its fiscal 2022 guidance.
Earnings & Revenues
During the fiscal third quarter, Darden reported adjusted earnings of $1.93 per share, missing the Zacks Consensus Estimate of $2.09 by 7.7%. In the prior-year quarter, DRI had reported adjusted earnings per share (EPS) of 98 cents.
Darden Restaurants, Inc. Price, Consensus and EPS Surprise
Total sales during the quarter came in at $2,448.9 million, missing the consensus mark of $2,527 million by 2.8%. However, sales increased 41.3% from the prior-year quarter’s level on solid blended same-restaurant sales of 38.1%. This apart, the opening of 33 net new restaurants added to the positives.
Sales by Segments
Darden reports business under four segments, namely Olive Garden, LongHorn Steakhouse, Fine Dining that includes The Capital Grille and Eddie V's as well as Other Business.
During the fiscal third quarter, sales at Olive Garden increased 31% year over year to $1,142.6 million. Comps in the segment rose 29.9% year over year compared with 29.3% growth reported in the previous quarter.
At LongHorn Steakhouse, sales were up 34.9% year over year to $612.7 million. Comps in the segment climbed 31.6% year over year compared with 31.2% growth reported in the previous quarter.
Sales in Fine Dining soared 100.8% year over year to $208.2 million. Comps in the segment surged 85.8% year over year compared with 61.6% growth reported in the previous quarter.
Sales at Other Business rose 60.2% year over year to $485.4 million. Moreover, comps in the Other Business rose 55.2% year over year compared with 42.9% growth reported in the previous quarter.
Operating Highlights
In the fiscal third quarter, total operating costs and expenses increased 35.5% year over year to $2,147.9 million. This escalation was primarily due to a rise in food and beverage costs, restaurant expenses and labor costs.
Balance Sheet
As of Feb 27, 2022, cash and cash equivalents came in at $555.3 million compared with $746.3 million as of Nov 28, 2021.
Inventories during the fiscal third quarter came in at $243.7 million compared with $230.2 in the previous quarter. Long-term debt as of Feb 27, 2022, was $916.4 million compared with $929 million as of Nov 28, 2021.
During the fiscal third quarter, Darden’s board of directors repurchased 2.7 million shares of its common stock worth approximately $382 million. At the end of third-quarter fiscal 2022, DRI had approximately $379 million remaining under its repurchase authorization.
Darden declared a quarterly cash dividend of $1.10 per share. The dividend will be payable May 2, 2022, to its shareholders of record as of Apr 8, 2022.
Updated Fiscal 2022 Outlook
For fiscal 2022, Darden lowered its sales expectation to $9.55-$9.62 billion from the previous forecast of $9.55-$9.7 billion. DRI expects total sales growth in the range of 9-10% (from pre-COVID levels) compared with the previous anticipation of 9-11%. Same-restaurant sales in fiscal 2022 is anticipated in the range of 29-30% (from the last fiscal’s level) compared with the previous estimate of 29-31%.
EBITDA for fiscal 2022 is anticipated in the range of $1.53-$1.55 billion compared with the previous projection of $1.55-$1.60 billion. EPS from continuing operations is anticipated in the band of $7.30-$7.45 compared with the previous guidance of $7.35-$7.60. Its mid-point of $7.4 is lower than the Zacks Consensus Estimate of $7.51.
Darden expects to open approximately 35 net new restaurants and projects a total capital spending of approximately $425 million for fiscal 2022.
Dave & Buster's sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 218.3%, on average. Shares of the company have gained 8% in the past six months.
The Zacks Consensus Estimate for PLAY’s 2022 sales and EPS suggests growth of 203.5% and 149.2%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth of 24.7%. Shares of the company have surged 49.2% in the past six months.
The Zacks Consensus Estimate for ARCO’s 2022 sales and EPS suggests growth of 10.3% and 54.2%, respectively, from the year-ago period’s levels.
Tapestry carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 28.2%, on average. Shares of the company have declined 6.4% in the past six months.
The Zacks Consensus Estimate for TPR’s 2022 sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s levels.
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Darden (DRI) Q3 Earnings & Revenue Miss Estimates, Rise Y/Y
Darden Restaurants, Inc. (DRI - Free Report) reported third-quarter fiscal 2022 results, with earnings and revenues missing the Zacks Consensus Estimate. The metrics increased on a year-over-year basis. The company stated that the Omicron variant significantly impacted guest demand in January as well as restaurant staffing and operating expenses.
Following the results, the company’s shares declined 1.7% in the pre-market trading session. Negative investor sentiments were witnessed as DRI slashed its fiscal 2022 guidance.
Earnings & Revenues
During the fiscal third quarter, Darden reported adjusted earnings of $1.93 per share, missing the Zacks Consensus Estimate of $2.09 by 7.7%. In the prior-year quarter, DRI had reported adjusted earnings per share (EPS) of 98 cents.
Darden Restaurants, Inc. Price, Consensus and EPS Surprise
Darden Restaurants, Inc. price-consensus-eps-surprise-chart | Darden Restaurants, Inc. Quote
Total sales during the quarter came in at $2,448.9 million, missing the consensus mark of $2,527 million by 2.8%. However, sales increased 41.3% from the prior-year quarter’s level on solid blended same-restaurant sales of 38.1%. This apart, the opening of 33 net new restaurants added to the positives.
Sales by Segments
Darden reports business under four segments, namely Olive Garden, LongHorn Steakhouse, Fine Dining that includes The Capital Grille and Eddie V's as well as Other Business.
During the fiscal third quarter, sales at Olive Garden increased 31% year over year to $1,142.6 million. Comps in the segment rose 29.9% year over year compared with 29.3% growth reported in the previous quarter.
At LongHorn Steakhouse, sales were up 34.9% year over year to $612.7 million. Comps in the segment climbed 31.6% year over year compared with 31.2% growth reported in the previous quarter.
Sales in Fine Dining soared 100.8% year over year to $208.2 million. Comps in the segment surged 85.8% year over year compared with 61.6% growth reported in the previous quarter.
Sales at Other Business rose 60.2% year over year to $485.4 million. Moreover, comps in the Other Business rose 55.2% year over year compared with 42.9% growth reported in the previous quarter.
Operating Highlights
In the fiscal third quarter, total operating costs and expenses increased 35.5% year over year to $2,147.9 million. This escalation was primarily due to a rise in food and beverage costs, restaurant expenses and labor costs.
Balance Sheet
As of Feb 27, 2022, cash and cash equivalents came in at $555.3 million compared with $746.3 million as of Nov 28, 2021.
Inventories during the fiscal third quarter came in at $243.7 million compared with $230.2 in the previous quarter. Long-term debt as of Feb 27, 2022, was $916.4 million compared with $929 million as of Nov 28, 2021.
During the fiscal third quarter, Darden’s board of directors repurchased 2.7 million shares of its common stock worth approximately $382 million. At the end of third-quarter fiscal 2022, DRI had approximately $379 million remaining under its repurchase authorization.
Darden declared a quarterly cash dividend of $1.10 per share. The dividend will be payable May 2, 2022, to its shareholders of record as of Apr 8, 2022.
Updated Fiscal 2022 Outlook
For fiscal 2022, Darden lowered its sales expectation to $9.55-$9.62 billion from the previous forecast of $9.55-$9.7 billion. DRI expects total sales growth in the range of 9-10% (from pre-COVID levels) compared with the previous anticipation of 9-11%. Same-restaurant sales in fiscal 2022 is anticipated in the range of 29-30% (from the last fiscal’s level) compared with the previous estimate of 29-31%.
EBITDA for fiscal 2022 is anticipated in the range of $1.53-$1.55 billion compared with the previous projection of $1.55-$1.60 billion. EPS from continuing operations is anticipated in the band of $7.30-$7.45 compared with the previous guidance of $7.35-$7.60. Its mid-point of $7.4 is lower than the Zacks Consensus Estimate of $7.51.
Darden expects to open approximately 35 net new restaurants and projects a total capital spending of approximately $425 million for fiscal 2022.
Zacks Rank & Key Picks
Darden currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Retail-Wholesale sector include Dave & Buster's Entertainment, Inc. (PLAY - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Tapestry, Inc. (TPR - Free Report) .
Dave & Buster's sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 218.3%, on average. Shares of the company have gained 8% in the past six months.
The Zacks Consensus Estimate for PLAY’s 2022 sales and EPS suggests growth of 203.5% and 149.2%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth of 24.7%. Shares of the company have surged 49.2% in the past six months.
The Zacks Consensus Estimate for ARCO’s 2022 sales and EPS suggests growth of 10.3% and 54.2%, respectively, from the year-ago period’s levels.
Tapestry carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 28.2%, on average. Shares of the company have declined 6.4% in the past six months.
The Zacks Consensus Estimate for TPR’s 2022 sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s levels.