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What Do Analysts Expect of Darden’s Earnings in Fiscal 4Q16?

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Earnings per share

Having discussed Darden Restaurants’ (DRI) estimated revenue, sources of revenue, and estimated EBIT (earnings before interest and tax) margins, let’s now discuss analysts’ EPS (earnings per share) estimates and DRI’s management’s guidance for fiscal 4Q16.

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Fiscal 4Q16 expectations

Darden’s management has set its EPS guidance for fiscal 2016 in the range of $3.48–$3.52, which represents a rise of 30%–32% from fiscal 2015. With EPS of $2.43 earned in the first three quarters of fiscal 2016, Darden’s management expects its fiscal 4Q16 EPS to be in the range of $1.05–$1.09 compared to $1.08 in 4Q15.

Analysts expect Darden to post EPS of $1.08, the same as in fiscal 4Q15. The fall in its fiscal 4Q16 revenue is expected to be offset by rises in its EBIT margins and share repurchases in the last 12 months. Share repurchases reduce the number of a company’s outstanding shares, thus increasing its EPS.

We’ll discuss share repurchases by Darden, which forms 0.14% of the holdings of the iShares Russell Mid-Cap ETF (IWR), in our next article.

Peers comparisons

During the same period, analysts expect the EPS of Darden’s peers Texas Roadhouse (TXRH), Bloomin’ Brands (BLMN), and Brinker International (EAT) to rise by 50%, 7.1%, and 30.1%, respectively.

Outlook

With Darden’s revenue and EBIT margins expected to improve in the first three quarters of fiscal 2017, analysts expect the company to post EPS of $2.8, representing a rise of 28.8% from EPS of $2.2 in the first three quarters of fiscal 2016.

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