We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Darden (DRI) Earnings Surpass Estimates in Q1, Sales Miss
Read MoreHide Full Article
Darden Restaurants, Inc. (DRI - Free Report) reported first-quarter fiscal 2020 results, wherein earnings surpassed the Zacks Consensus Estimate but sales lagged the same. With this, the company delivered third-straight quarter of bottom-line beat, whereas the top line missed the consensus mark for the second straight quarter.
Following the quarterly results, shares of Darden Restaurants decreased nearly 3% in the pre-market trading session. However, the stock has gained 27.3% so far this year compared with the industry’s 27.1% rally.
In the quarter under review, adjusted earnings came in at $1.38 per share, which outpaced the Zacks Consensus Estimate of $1.36. The bottom line also increased 3% year over year on higher sales. Results were aided by the company’s relentless efforts to improve the basic operating factors of the business — food, service and ambiance.
Total sales of $2,133.9 million lagged the consensus mark of $2,137 million. However, sales increased 3.5% from the prior-year quarter. The upside was driven by the addition of 40 net restaurants and a 0.9% increase in blended comps.
Sales by Segments
Darden reports business under four segments — Olive Garden, LongHorn Steakhouse, Fine Dining that includes The Capital Grille and Eddie V's, and Other Business.
Sales at Olive Garden increased 3.6% year over year to $1,090.2 million. Comps grew 2.2% at the segment, lower than the prior-quarter’s comp growth of 2.4%. Traffic declined 0.8%. Pricing improved 2.2% and menu-mix increased 0.8%.
Sales at Fine Dining improved 4.8% to $136.1 million. Comps at The Capital Grille rose 1.5% compared with 2.9% growth recorded in fourth-quarter fiscal 2019. Further, Eddie V's posted comps growth of 1.2%, lower than 2% improvement recorded in the prior quarter.
Sales at Other Business grew 1.8% year over year to $457.4 million. However, comps at Seasons 52 fell 4.2% in the reported quarter compared with a comps decline of 1.5% in fourth-quarter fiscal 2019. Comps at Yard House inched down 1.9% compared with 1.4% decrease in the prior quarter. Meanwhile, comps slipped 4.2% at Bahama Breeze compared with a decline of 1.9% in the preceding quarter.
At LongHorn Steakhouse, sales rose 4.6% to $450.2 million. Comps at the segment increased 2.6%, down from comps growth of 3.3% in the fiscal fourth quarter. Traffic increased 0.3%. Also, pricing and menu mix grew 1.7% and 0.6%, respectively.
In the reported quarter, comps at Cheddar's decreased 5.4% compared with a 3.4% decline in fourth-quarter fiscal 2019.
Darden Restaurants, Inc. Price, Consensus and EPS Surprise
In the fiscal first quarter, total operating costs and expenses increased 3.2% year over year to $1,932.4 million. The rise was due to an overall increase in food and beverage costs, restaurant expenses, and labor costs.
Net earnings in the first quarter totaled $170.6 million, up 2.6% from the year-ago level.
Balance Sheet
Cash and cash equivalents as of Aug 25, 2019, totaled $350.8 million, up from $457.3 million as of May 23, 2019.
Inventories summed $199 million at the end of the reported quarter. Long-term debt as of Aug 25, 2019, was $928 million, up from $927.7 million as of May 26, 2019.
During the fiscal first quarter, Darden repurchased approximately 0.8 million shares of its common stock for roughly $95 million. The company also authorized a fresh share repurchase program of $500 million.
Fiscal 2020 Outlook
Darden reiterated its fiscal 2020 outlook. The company continues to expect total revenue growth of 5.3-6.3% during the fiscal year. This will include the 2% positive synergy from the 53rd week. Comps are projected to increase 1-2%. Darden’s earnings per share are anticipated to be $6.30-$6.45.
Meanwhile, the company expects inflation to be up 2.5% in 2020. With an effective tax rate of 10-11%, total capital spending is expected to be $450-$500 million. Darden plans to open 50 gross and 44 net new restaurants in 2020.
Yum China, Starbucks and Shake Shack have an impressive long-term earnings growth rate of 9.4%, 13% and 22.5%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Darden (DRI) Earnings Surpass Estimates in Q1, Sales Miss
Darden Restaurants, Inc. (DRI - Free Report) reported first-quarter fiscal 2020 results, wherein earnings surpassed the Zacks Consensus Estimate but sales lagged the same. With this, the company delivered third-straight quarter of bottom-line beat, whereas the top line missed the consensus mark for the second straight quarter.
Following the quarterly results, shares of Darden Restaurants decreased nearly 3% in the pre-market trading session. However, the stock has gained 27.3% so far this year compared with the industry’s 27.1% rally.
In the quarter under review, adjusted earnings came in at $1.38 per share, which outpaced the Zacks Consensus Estimate of $1.36. The bottom line also increased 3% year over year on higher sales. Results were aided by the company’s relentless efforts to improve the basic operating factors of the business — food, service and ambiance.
Total sales of $2,133.9 million lagged the consensus mark of $2,137 million. However, sales increased 3.5% from the prior-year quarter. The upside was driven by the addition of 40 net restaurants and a 0.9% increase in blended comps.
Sales by Segments
Darden reports business under four segments — Olive Garden, LongHorn Steakhouse, Fine Dining that includes The Capital Grille and Eddie V's, and Other Business.
Sales at Olive Garden increased 3.6% year over year to $1,090.2 million. Comps grew 2.2% at the segment, lower than the prior-quarter’s comp growth of 2.4%. Traffic declined 0.8%. Pricing improved 2.2% and menu-mix increased 0.8%.
Sales at Fine Dining improved 4.8% to $136.1 million. Comps at The Capital Grille rose 1.5% compared with 2.9% growth recorded in fourth-quarter fiscal 2019. Further, Eddie V's posted comps growth of 1.2%, lower than 2% improvement recorded in the prior quarter.
Sales at Other Business grew 1.8% year over year to $457.4 million. However, comps at Seasons 52 fell 4.2% in the reported quarter compared with a comps decline of 1.5% in fourth-quarter fiscal 2019. Comps at Yard House inched down 1.9% compared with 1.4% decrease in the prior quarter. Meanwhile, comps slipped 4.2% at Bahama Breeze compared with a decline of 1.9% in the preceding quarter.
At LongHorn Steakhouse, sales rose 4.6% to $450.2 million. Comps at the segment increased 2.6%, down from comps growth of 3.3% in the fiscal fourth quarter. Traffic increased 0.3%. Also, pricing and menu mix grew 1.7% and 0.6%, respectively.
In the reported quarter, comps at Cheddar's decreased 5.4% compared with a 3.4% decline in fourth-quarter fiscal 2019.
Darden Restaurants, Inc. Price, Consensus and EPS Surprise
Darden Restaurants, Inc. price-consensus-eps-surprise-chart | Darden Restaurants, Inc. Quote
Operating Highlights & Net Income
In the fiscal first quarter, total operating costs and expenses increased 3.2% year over year to $1,932.4 million. The rise was due to an overall increase in food and beverage costs, restaurant expenses, and labor costs.
Net earnings in the first quarter totaled $170.6 million, up 2.6% from the year-ago level.
Balance Sheet
Cash and cash equivalents as of Aug 25, 2019, totaled $350.8 million, up from $457.3 million as of May 23, 2019.
Inventories summed $199 million at the end of the reported quarter. Long-term debt as of Aug 25, 2019, was $928 million, up from $927.7 million as of May 26, 2019.
During the fiscal first quarter, Darden repurchased approximately 0.8 million shares of its common stock for roughly $95 million. The company also authorized a fresh share repurchase program of $500 million.
Fiscal 2020 Outlook
Darden reiterated its fiscal 2020 outlook. The company continues to expect total revenue growth of 5.3-6.3% during the fiscal year. This will include the 2% positive synergy from the 53rd week. Comps are projected to increase 1-2%. Darden’s earnings per share are anticipated to be $6.30-$6.45.
Meanwhile, the company expects inflation to be up 2.5% in 2020. With an effective tax rate of 10-11%, total capital spending is expected to be $450-$500 million. Darden plans to open 50 gross and 44 net new restaurants in 2020.
Zacks Rank & Key Picks
Darden has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the same space include Yum China Holdings, Inc. (YUMC - Free Report) , Starbucks Corporation (SBUX - Free Report) and Shake Shack Inc. (SHAK - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Yum China, Starbucks and Shake Shack have an impressive long-term earnings growth rate of 9.4%, 13% and 22.5%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>