Why Analysts Expect Darden Restaurants’ Q2 EPS to Rise



Analysts’ EPS expectations

For the second quarter of fiscal 2019, analysts are expecting Darden Restaurants (DRI) to post adjusted EPS of $0.91, which represents a rise of 24.2% from $0.73 in the second quarter of fiscal 2018. The EPS growth is expected to be driven by revenue growth, expansion of net margins, and share repurchases.

For the fiscal second quarter, analysts expect Darden’s net margin to improve from 4.9% in the second quarter of fiscal 2018 to 5.8%. The expansion is expected to be driven by higher gross margins and a lower effective tax rate partially offset by higher SG&A (selling, general, and administrative) expenses due to an increase in labor wages. Analysts expect higher menu prices and cost-saving initiatives to improve the company’s gross margins.

Due to the enactment of tax reforms in December 2017, the company’s effective tax rate is expected to fall from 22.3% in the second quarter of fiscal 2018 to 12.0%.

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Peer comparisons

During the same period, Brinker International (EAT) posted EPS growth of 11.9%, while the EPS of Texas Roadhouse (TXRH) and Bloomin’ Brands (BLMN) has fallen 6.7%, and 28.6%, respectively.


For fiscal 2019, Darden’s management expects its EPS to be in the range of $5.52–$5.65. Analysts expect the company to post EPS of $5.65 during the same period, which represents growth of 17.4% from $4.81 in fiscal 2018.

Next, we’ll look at analysts’ recommendations.


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