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Darden’s Q3 2019 EPS Beat Analysts’ Estimates

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Mar. 22 2019, Published 7:55 a.m. ET

Third-quarter EPS

In the third quarter of fiscal 2019, Darden Restaurants (DRI) posted adjusted EPS of $1.80, outperforming analysts’ EPS expectation of $1.75.

Year-over-year, the company’s EPS rose 5.3% from $1.71 in the corresponding quarter of fiscal 2018. Revenue growth, EBIT margin expansion, and share repurchases partially offset by an increase in the effective tax rate drove the company’s EPS.

As Darden cycled the implementation of tax reforms, its effective tax rate was higher in the third quarter compared to the previous year. In the quarter, Darden’s effective tax rate stood at 11.1% compared to 4.4% in the corresponding quarter of fiscal 2018.

Moving on to share repurchases, Darden repurchased ~1.88 million shares for ~$193.5 million in the last four quarters, including 0.7 million shares for $74 million in the third quarter alone. Share repurchases drive a company’s EPS by lowering its number of shares outstanding.

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Peer comparison

During the comparable quarter, Texas Roadhouse (TXRH), Bloomin’ Brands (BLMN), and Brinker International (EAT) posted EPS growth of 5.0%, -26.8%, and 2.3%, respectively.

Dividends

On March 21, Darden’s board announced a quarterly dividend of $0.75 per share, representing an annual payout of $3.0 per share. The next dividend will be paid on May 1 to shareholders on record as of April 10.

As of March 21, the company’s dividend yield was 2.58%, with its stock price trading at $116.11. On the same day, the dividend yields of Texas Roadhouse, Bloomin’ Brands, and Brinker International stood at 1.97%, 2.02%, and 3.5%, respectively.

Next, we’ll look at analysts’ expectations for fiscal 2019.

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