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Darden Restaurants: Five-Year Stock Performance

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The five-year trend

During the past few years, Darden Restaurants (DRI) has undergone several significant events. These landmarks include the sale of Red Lobster in 2014, as well as the acquisition of RARE Hospitality International, through which Darden acquired LongHorn Steakhouse and The Capital Grille. Over these last five years, Darden’s revenue declined from $7,113 million in fiscal 2010 to $6,285 million in fiscal 2014.

However, the share price of the company has increased from ~$35 levels in early 2010 to ~$69 as of March 2015.

 

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Darden’s stock price jumped as much as 5% in September 2014. The company filed an investor presentation with the SEC (or Securities and Exchange Commission) regarding its operating initiatives. Investors seem to have cheered the operational efficiency mentioned by Darden’s management, along with the company’s firm response to Starboard Value’s suggestions for Olive Garden’s turnaround.

Peer restaurants also rise

Over the same five-year period, DineEquity (DIN), which operates Applebee’s and IHOP, saw its share price increase from $36.20 to ~$105. The operator of Chili’s and Maggiano’s Little Italy, Brinker International (EAT) saw its share price hovering around $17 five years ago, which has increased to $58 levels as of March 2015.

Investors can gain exposure to several restaurant stocks at once by investing in ETFs. The Consumer Discretionary Select Sector SPDR ETF (XLY) holds about 10% of the restaurant sector along with several retail stocks. This ETF also holds restaurant stocks such as Chipotle Mexican Grill (CMG) and Starbucks (SBUX).

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