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Will Darden’s Fiscal 1Q18 Earnings Boost Its Stock Price?

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Stock performance

Darden Restaurants (DRI) operates Olive Garden, LongHorn Steakhouse, the Capital Grille, Eddie V’s, Bahama Breeze, Seasons 52, and Yard House. Darden will announce its fiscal 1Q18 earnings before the market opens on September 26, 2017.

In fiscal 4Q17, Darden posted an adjusted EPS (earnings per share) of $1.18 on revenues of $1.9 billion. Analysts expected the company to post EPS of $1.15 on revenues of $1.9 billion. Despite the better-than-expected fiscal 4Q17 earnings, Darden’s stock price fell due to the devastation caused by Hurricane Harvey and Hurricane Irma. With more than 20% of Darden’s restaurants located in Texas and Florida, investors expect the hurricanes to lower the company’s fiscal 1Q18 sales. The fear of lower sales led to a fall in its stock price. As of September 19, 2017, Darden was trading at $83.31, which represents a fall of 7.5% since the announcement of its 4Q17 earnings on June 27, 2017.

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Year-to-date performance

Despite the recent fall in its stock price, Darden has returned 14.6% since the beginning of 2017. During the same period, its peers Brinker International (EAT), Bloomin’ Brands (BLMN), and Texas Roadhouse (TXRH) saw their stock prices fall 35.4%, 6.7%, and 0.7%, respectively.

Notably, the S&P 500 Index (SPX) (SPX-INDEX) and the iShares U.S. Consumer Services ETF (IYC) have returned 12.0% and 8.3%, respectively. IYC has invested 11.6% of its holding in restaurant and travel companies.

Series overview

With Darden’s fiscal 1Q18 earnings around the corner, we’ll look at analysts’ revenue and EPS estimates. We’ll also cover management’s guidance for fiscal 2018 and analysts’ expectations for the next four quarters. Finally, we’ll discuss Darden’s valuation multiple and analysts’ recommendations.

In the next part, we’ll look at Darden’s fiscal 1Q18 revenue estimates.

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