Darden’s Q1 Earnings to Rise Over 190%, Revenue to Jump 45%
Darden, which operates full-service restaurants in the United States and Canada, is expected to report its fiscal first-quarter earnings of $1.64 per share, which represents year-over-year growth of over 190%, up from $0.56 per share seen in the same period a year ago.
The Orlando-based multi-brand restaurant operator would post year-over-year revenue growth of over 45% to $2.2 billion. In the last four quarters, on average, Darden has beaten earnings estimates over 268%.
The company’s next earnings report is expected to be released on Wednesday, September 23 before the market opens.
According to ZACKS Research, several factors contributed to Darden’s strong fiscal first-quarter results, including increased vaccinations and expanded dining room capacity that likely contributed to the sequential sales increase. The fiscal first-quarter margins may, however, have been hit by increased hourly wages and marketing expenses.
“The Zacks Consensus Estimate for sales at Olive Garden, Fine Dining, and LongHorn Steakhouse is pegged at $1,120 million, $136 million and $508 million, suggesting year-over-year growth of 42.1%, 63.9% and 34.7%, respectively. The same for Other business stands at $433 million, suggesting an improvement of 55.2% from the prior-year quarter,” noted analysts at ZACKS Research.
Darden shares surged nearly 25% so far this year but the stock closed 0.49% lower at $148.69 on Monday.
“Best in class casual dining operator with strong brand portfolio. As the largest CDR operator, DRI has substantial scale advantages in shared services which can be levered in a post-Covid environment by improving margins and gaining market share. Lead brand Olive Garden (50% of sales) garners top consumer scores, its comp sales have historically outpaced the industry and recent cost savings have improved unit economics,” noted John Glass, equity analyst at Morgan Stanley.
“Acquisition of Cheddar’s has been more challenging than initially expected, though still provides longer-term growth potential. Strong position relative to peers, scale, operational leadership, unit growth and structurally higher margins drives our OW rating.”
Darden Restaurants Stock Price Forecast
Seventeen analysts who offered stock ratings for Darden Restaurants in the last three months forecast the average price in 12 months of $161.79 with a high forecast of $175.00 and a low forecast of $150.00.
The average price target represents an 8.81% change from the last price of $148.69. From those 17 analysts, 11 rated “Buy”, six rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $167 with a high of $208 under a bull scenario and $105 under the worst-case scenario. The firm gave an “Overweight” rating on the multi-brand restaurant operator’s stock.
Several other analysts have also updated their stock outlook. Deutsche Bank raised the target price to $152 from $145. Oppenheimer lifted the price target to $175 from $165. Truist Securities slashed the target price to $167 from $170.
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