Darden Stock Rises after Management Raises Its EPS Guidance


Dec. 19 2018, Updated 3:33 p.m. ET

Second quarter of fiscal 2019

Darden Restaurants (DRI) posted its earnings for the second quarter of fiscal 2019 on December 18. In the quarter, which ended on November 25, the company posted adjusted EPS of $0.92 on revenue of $1.97 billion.

Year-over-year, the company’s revenue rose 4.9%, while its adjusted EPS rose 26%.

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Stock performance

During the quarter, Darden outperformed analysts’ EPS expectation of $0.91, but its total revenue fell short of analysts’ estimate of $1.98 billion. Also during the quarter, Darden’s two main brands, Olive Garden and LongHorn Steakhouse, posted strong same-store sales growth that outperformed analysts’ expectations. After posting its fiscal 2019 second-quarter earnings results, the company raised its EPS guidance for fiscal 2019, which appears to have increased investors’ confidence, leading to a rise in its stock price.

On December 18, the company’s stock rose to a high of $105.09 before closing at $103.85, up 5.0% from its previous day’s closing price.

Year-to-date performance

YTD (year-to-date), Darden has returned 8.1%. During the same period, its peers Texas Roadhouse (TXRH), Bloomin’ Brands (BLMN), and Brinker International (EAT) have returned 17.8%, -15.3%, and 25.0%, respectively. Meanwhile, the broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), which invests 8.0% of its holdings in restaurant and travel companies, has returned 1.8% YTD.

Series overview

In this series, we’ll look at Darden’s performance in the second quarter of fiscal 2019 and compare it with analysts’ expectations. We’ll also cover Darden’s management’s guidance and analysts’ expectations for its fiscal 2019. We’ll end the series by looking at Darden’s valuation and analysts’ recommendations for its stock.

Let’s start our analysis by looking at Darden’s fiscal 2019 second-quarter revenue.


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