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Can Darden’s Q4 Earnings Maintain Upward Momentum?

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Stock performance

Darden Restaurants (DRI) will report its fiscal 2019 fourth-quarter earnings before the market opens on June 20. On June 14, the company was trading at $119.68, indicating a rise of 10.2% since the announcement of its third-quarter earnings results on March 21.

The company is trading at a discount of 4.5% to its 52-week high of $125.33 and at a premium of 28.7% to its 52-week low of $93.0.

In the first quarter, Darden reported adjusted EPS of $1.80 on revenue of $2.25 billion, outperforming analysts’ EPS expectation of $1.75 and their revenue estimate of $2.24 billion. The company’s overall SSSG (same-store sales growth) came in at 2.8%, beating analysts’ expectation of 2.2%. After Darden posted its third-quarter earnings results, its management raised its SSSG, revenue, and EPS guidance for fiscal 2019. The company’s impressive third-quarter performance and its management’s raising of its guidance appear to have contributed to the rise in its stock price.

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YTD performance

YTD (year-to-date), Darden has returned 19.8%, outperforming the broader equity market, while the S&P 500 Index has risen 15.2% during the same period. In comparison, Darden’s peers Bloomin’ Brands (BLMN), Texas Roadhouse (TXRH), and Brinker International (EAT) have returned 11.3%, -9.2%, and -10.1%, respectively. The Consumer Discretionary Select Sector SPDR ETF (XLY), which has invested 7.6% of its holdings in restaurant and travel companies, has returned 19.7% YTD.

 

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