Bear of the Day: Darden Restaurants (DRI)
by Zacks Equity ResearchDecember 21, 2012 | Comments : 0 Recommended this article: (0)
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Stiff competition resulting in higher discounting rates, failure of some promotional offers, probability of higher 2013 SG&A expenses as well as cautious consumer spending will add to the woes. Most importantly, Darden recently slashed its earnings per share guidance for fiscal 2013 to reflect the dilutive effect of the latest Yard House acquisition and the adverse impact from Hurricane Sandy.
Our six-month target price of $42.00 equates to about 12.4x our estimate for 2013. The target price implies an expected negative return of 7.4% over that period. We recommend an Underperform recommendation on the shares.