Darden Stock Rises Nearly 7% on Impressive Q3 2019 Results

Darden Restaurants (DRI) posted its results for the third quarter of fiscal 2019 on March 21. For the quarter, which ended on February 24, the company posted adjusted EPS of $1.80 on revenue of $2.25 billion. Year-over-year, the company’s adjusted EPS rose 5.3%, while its revenue rose 5.5%.

During the quarter, Darden outperformed analysts’ EPS expectation of $1.75 and their revenue estimate of $2.24 billion. The company also beat analysts’ overall SSSG (same-store sales growth) estimate of 2.2% by posting SSSG of 2.8%. After posting its third-quarter results, the company’s management raised its SSSG, revenue growth, and EPS guidances for fiscal 2019.

Darden’s strong third-quarter earnings and raising of its guidance appear to have increased investors’ confidence, leading to a rise in the company’s stock price. On March 21, the stock was trading at $116.11, a rise of 6.9% from its previous day’s closing price.

YTD (year-to-date), Darden stock has risen 16.1%. During the same period, its peers Texas Roadhouse (TXRH), Bloomin’ Brands (BLMN), and Brinker International (EAT) have posted returns of 2.2%, -1.8%, and 10.5%, respectively. The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), which invests 8.2% of its holdings in restaurant and travel companies, has returned 15.1% YTD.

In this series, we’ll look at Darden’s performance in the third quarter and compare it with analysts’ expectations. We’ll also cover its management’s guidance and analysts’ estimates for fiscal 2019 and fiscal 2020. Finally, we’ll look at the company’s valuation and analysts’ recommendations.

First, let’s look at Darden’s revenue.