Why Darden Restaurants Stock Was Flat after Fiscal 2Q17 Earnings



Fiscal 2Q17 performance

Darden Restaurants (DRI), which operates Olive Garden, LongHorn Steakhouse, the Capital Grille, Eddie V’s, Bahama Breeze, Seasons 52, and Yard House, announced its fiscal 2Q17 results on December 20, 2016. The company reported EPS (earnings per share) of $0.64 on overall revenue of $1.64 billion. Compared to fiscal 2Q16, revenue rose 2.1%, and adjusted EPS rose 18.5%.

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Market response

Wall Street analysts were expecting Darden to post adjusted EPS of $0.64 on revenue of $1.65 billion. Since earnings were in line with analyst estimates, there wasn’t much movement in Darden stock.

The company’s stock, which has risen 15.4% since Donald Trump won the US presidential election, closed December 20, 2016, at $75.74. The previous day’s closing price was $75.68.

After Darden reported its fiscal 2Q17 earnings, management reaffirmed its fiscal 2017 EPS guidance.

Year-to-date performance

It’s been a good year for Darden Restaurants. The stock has risen 20.7% year-to-date compared to 7.4% in 2015. Since the beginning of 2016, Darden’s peers Texas Roadhouse (TXRH), Brinker International (EAT), and Bloomin’ Brands (BLMN) have risen 39.3%, 7.1%, and 13.5%, respectively.

The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), has risen 8.7% year-to-date. XLY invests more than 9.7% of its holdings in restaurant and travel companies.

Series overview

In this series, we’ll be looking at Darden Restaurants’ fiscal 2Q17 earnings as well as its performance on key metrics in the quarter. We’ll also cover management’s guidance and analyst estimates for fiscal 2017 and beyond.

Let’s start by taking a close look at Darden’s fiscal 2Q17 revenue.


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