
Darden Raised Its Earnings Guidance for Fiscal 2018
By Rajiv NanjaplaUpdated
EPS guidance
On January 8, 2018, Darden Restaurants (DRI) raised its EPS (earnings per share) guidance for fiscal 2018 to $4.70–$4.78 from an earlier estimate of $4.45–$4.53. The new guidance represents 23.7%–25.8% growth from $3.80 in fiscal 2017.
Darden’s management expects the “Tax Cuts and Jobs Act,” which was enacted on December 22, 2017, to lower its corporate tax rates 6% for fiscal 2018. Darden stated that the resolution of other tax matters, which isn’t related to tax cuts, is expected to lower the tax rate 1.0%. The company estimated that lowering the tax rate will help it record a non-cash net tax benefit of ~$70 million in fiscal 2018.
Management’s guidance and analysts’ estimates
Darden maintained its SSSG (same-store sales growth) and revenue growth guidance for fiscal 2018 at 2.0% and 13.0%, respectively. Analysts expect the company to post revenue of $8.09 billion in fiscal 2018—12.8% growth from $7.17 billion in fiscal 2017. They expect Darden to post an EPS of $4.63 in fiscal 2018—15.3% growth year-over-year.
Peer comparison
For the next four quarters, analysts expect Darden’s EPS to rise 17.1% to $4.94. During this period, Texas Roadhouse (TXRH), Bloomin’ Brands (BLMN), and Brinker International (EAT) are expected to post EPS growth of 16.1%, 11.2%, and 5.4%, respectively.
Next, we’ll discuss Darden’s stock performance.