In the third quarter, Darden Restaurant (DRI) outperformed analysts’ SSSG (same-store sales growth), revenue, and EPS expectations. The strong third-quarter results appear to have increased investors’ confidence. At 9:45 AM EST on March 21, Darden was trading at $114.56, which represents a rise of 5.5% from the previous day’s closing price.
So far, Darden has been positive in 2019. The stock price has risen 8.8% YTD (year-to-date) as of March 20. However, the company’s returns have lagged the S&P 500 Index by 3.9%. During the same period, Texas Roadhouse (TXRH), Brinker International (EAT), and Bloomin’ Brands (BLMN) have returned 0.6%, -3.3%, and 8.3%, respectively. The Consumer Discretionary Select Sector SPDR ETF’s (XLY) stock price has risen 13.5% YTD.
The increase in Darden’s stock price since the beginning of 2019 has increased its valuation multiple. On March 20, Darden was trading at a forward PE ratio of 17.7x—compared to 16.5x at the beginning of 2019. Texas Roadhouse, Brinker International, and Bloomin’ Brands were trading at a forward PE ratios of 23.7x, 10.9x, and 12.8x, respectively.
On March 21, Darden’s board announced quarterly dividends of $0.75 per share. The dividends will be paid on May 1 to shareholders recorded as of April 10.