Darden Stock Rises after SunTrust Robinson Upgrade


Jun. 8 2018, Updated 11:52 a.m. ET

Stock performance

By the end of June 7, Darden Restaurants (DRI) was trading at $91.40, 0.5% higher than its closing price the day prior. SunTrust Robinson Humphrey’s upgrade appears to have boosted investors’ confidence, supporting the company’s stock price.

Article continues below advertisement

Year-to-date stock performance

After posting a strong 32.0% return in 2017, Darden has struggled this year. Year-to-date, its stock has fallen 4.8%. In its last reported quarter (fiscal Q3 2018), the company posted adjusted EPS of $1.71 on revenue of $2.13 billion. Analysts were expecting the company to post EPS of $1.64 on revenue of $2.15 billion. The company’s SSSG (same-store sales growth) was 2.0%, missing analysts’ estimate of 2.5%. Although Darden beat analysts’ EPS estimates, its stock price fell due to lower-than-expected SSSG and Darden’s announcement that it would not be offering the company’s most popular promotion, Buy One Take One, in the fourth quarter.

In comparison, peers Texas Roadhouse (TXRH), Bloomin’ Brands (BLMN), and Brinker International (EAT) have returned 20.9%, -0.5%, and 21.8%, this year, respectively. Meanwhile, the broader comparative S&P 500 (SPX) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 3.6% and 11.1%.

Analysts’ estimates and valuation

In the next four quarters, from fiscal Q4 2018 to fiscal Q3 2019, analysts expect Darden to post revenue of $8.4 billion, which represents 5.9% growth year-over-year. During the same period, the company’s EPS are expected to rise 12.4% YoY to $5.18.

As of June 7, Darden had a forward PE multiple of 16.9x, while peers Texas Roadhouse, Bloomin’ Brands, and Brinker International had PE multiples of 25.1x, 14.5x, and 12.7x, respectively.


More From Market Realist

  • People looking at data on a laptop
    Is Driven Brands (DRVN) a Good Stock to Buy? A Look at the Year Ahead
  • A Moscow Mule drink made with Reed's
    Is Reed's (REED) a Good Stock to Buy? A Look at the Year Ahead
  • Woman using a laptop
    How Taxes on Inherited Stocks Work, Potential Changes
  • Chlorine products
    Why There's a Chlorine Shortage in 2021 and What It Means
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.