is darden restaurants a buy
Source: istock photo

What Jim Cramer Has to Say About Darden Stock After Reported Earnings

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Sep. 25 2020, Updated 10:58 a.m. ET

Is Darden Restaurants stock a good investment? The company, whose holdings include Olive Garden and LongHorn Steakhouse, has released its latest financial report, which shows its chains continue to thrive amid the COVID-19 pandemic that threatens to put many of its smaller competitors out of business. 

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CNBC's Jim Cramer has declared Darden a buy, though as an independent restaurant owner himself, he may not be too happy about it. While large companies like Darden are performing well all things considered, small restaurants are unlikely to survive without help from Congress.

longhorn steakhouse
Source: istock photo
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What are Darden restaurants?

Darden Restaurants, based in Orlando, FL, runs a portfolio of restaurant businesses. Its brands of full-service restaurants are Olive Garden, Cheddar's Scratch Kitchen, The Capital Grille, LongHorn Steakhouse, Bahama Breeze, Seasons 52, Eddie V's, and Yard House.

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What’s the name of Jim Cramer’s restaurant?

Investor, CNBC’s Mad Money host, and former hedge fund manager Jim Cramer owns the Bar San Miguel restaurant in Brooklyn, NY. With the COVID-19 pandemic dragging on and Congress dividend on the second stimulus package, Cramer thinks most independent restaurants like his may eventually collapse. 

“Unfortunately, without some help from Congress, you better believe most independent restaurants will not be able to hold out. I know mine can’t,” said Cramer.

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But the collapse of small restaurants appears to be a boon for large restaurant chains like Darden Restaurants, who have less competition and greater resources to pivot to dine-in alternatives like carside pickup.

Darden has the balance sheet strength to ride out the pandemic, too. The company finished the latest quarter with $665 million in cash after fully paying $270 million term loan.

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What is Darden stock price today?

Darden stock popped up more than 1.58 percent to $98.85 ahead of market opening today at 8.00 a.m. EDT, building on yesterday’s gains. The stock rose 8.10 percent on Thursday to close the regular session at $97.31. Despite the COVID-19 reducing restaurant dining, Darden reported earnings per share that far exceeded expectations for the three months through August even though revenue declined. Darden stock is down about 11 percent in 2020.

Should I buy Darden stock?

Investors shopping for bargain opportunities among epicenter stocks might find Darden attractive. Darden stock currently trades about 22 percent below its 52-week high of $124. 

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Moreover, the most bullish analyst sees nearly 40 percent upside in Darden stock to $133 within 12 months. But not everyone on Wall Street is bullish about Darden. The most bearish analyst sees Darden stock dropping about 16 percent from current level to $82. Darden stock, which carries consensus buy rating, may also excite investors seeking out dividend stocks. Darden has just resumed paying dividend to its shareholders with $0.30 per share payout coming soon.

What are Jim Cramer stock picks?

In addition to Darden Restaurants, the other Jim Cramer stock picks include Apple and other big tech stocks like Facebook, Amazon, Netflix, and Alphabet that are down double-digits from their recent highs. Penn National, Bristol-Myers, and General Mills are Cramer’s other favorite stocks. 

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