We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Bet on Darden Restaurants (DRI) Stock
Read MoreHide Full Article
Darden Restaurants, Inc. (DRI - Free Report) is currently one of the top-performing stocks in the Zacks Retail-Wholesale sector and a rise in share price and strong fundamentals signal its bullish run. Therefore, if you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
The company has performed extremely well so far this year and has the potential to carry on the momentum in the near term.
Why an Attractive Pick?
Share Price Appreciation: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourse year to date. Darden Restaurants has returned 19.5%, which compares favorably with the industry’s gain of 14.8%.
Solid Rank & VGM Score: The company carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or #2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
Northward Estimate Revisions: One estimate for the current year moved north over the past seven days versus no southward revisions, reflecting growing analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for the current year increased 0.2%.
Positive Earnings Surprise History: Darden Restaurants has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 2.3%.
Strong Growth Prospects: The Zacks Consensus Estimate for fiscal 2018 earnings of $4.44 reflects year-over-year growth of 10.4%. Moreover, earnings are expected to register 9.7% growth in fiscal 2019. The stock has long-term expected earnings per share growth rate of 10.3%.
Growth Drivers: The acquisition ofCheddar's (Cheddar's Scratch Kitchen) acquisition has added an undisputed casual dining value leader to Darden's portfolio of differentiated brands and further enhanced its scale. We believe that Cheddar's restaurant level economics are very attractive, which aids in providing a strong return on investment.
Thus, Cheddar's seems to be a great fit in the company’s portfolio. Besides complementing its existing brands, it is also expected to attract customers given its extensive appeal. This in turn should drive Darden’s comps and resultantly sales.
In fact, as the company progresses with the integration of Cheddar’s, it gains more confidence in its synergy estimates. Management expects to realize synergies of $22 million to $27 million by the end of fiscal 2019 (up from previously projected range of $20 million to $25 million).
The Brand Renaissance Plan for Olive Garden is expected to boost the top line, going forward. The plan includes simplifying kitchen systems, improving sales planning and scheduling, operational excellence to improve guest experience, developing new core menu items, allowing customization and making smarter promotional investments.
Also, the brand is focusing on remodeling and bar refreshes. The revamped restaurants are already generating high same-restaurant sales and returns. In fact, the remodeling program gained momentum in the last couple of quarters and the company intends to continue investing in re-modeling for optimal returns.
Darden is also focusing on technology-driven initiatives, like the system wide rollout of tablets in order to capitalize on the digital wave that has hit the U.S. fast casual restaurant sector. This initiative has boosted sales for the past few quarters and is expected to do so, going forward.
Meanwhile, Olive Garden’s To Go business, which offers online ordering at selected locations, is also growing rapidly (increasing 12% year over year in the fiscal first quarter). The company has also launched catering in the United States, which is expected to add to its top line.
Initiatives to attract guests at LongHorn by focusing on core menu, culinary innovation and providing regional flavors also bode well. Darden is also working on its marketing strategy to improve execution; customer relationship management and digital advertising as well as a strong promotional pipeline that leverage the segment’s expertise.
Further, the company continues to focus on strengthening its in-restaurant execution through strategic investments in quality and simplification of operations in order to augment the guest experience. Owing to these efforts, segment comps have grown for the past 18 consecutive quarters.
Meanwhile, Capital Grille, Yard House, Seasons 52, Bahama Breeze and Eddie V have also posted positive comps in most of the quarters since the beginning of fiscal 2014. Its sales are driven by various initiatives undertaken and personalized services, which should also aid long-term growth.
The company is focusing on an aggressive cost management plan, under which it has been able to significantly cut operating costs. In fact, for fiscal 2018, the company expects 10-40 basis points year-over-year margin expansion as a result of cost savings. Moreover, the company plans to reinvest any incremental savings into pricing and long-term growth drivers for the business, particularly emphasizing on enhancing quality to drive market share gains.
Other Stocks to Consider
Some stocks in the same space are Famous Dave's of America, Inc. (DAVE - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Good Times Restaurants, Inc. (GTIM - Free Report) .
One estimate for the current year moved north over the past 60 days versus no southward revisions in case of all three companies.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Image: Bigstock
Here's Why You Should Bet on Darden Restaurants (DRI) Stock
Darden Restaurants, Inc. (DRI - Free Report) is currently one of the top-performing stocks in the Zacks Retail-Wholesale sector and a rise in share price and strong fundamentals signal its bullish run. Therefore, if you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
The company has performed extremely well so far this year and has the potential to carry on the momentum in the near term.
Why an Attractive Pick?
Share Price Appreciation: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourse year to date. Darden Restaurants has returned 19.5%, which compares favorably with the industry’s gain of 14.8%.
Solid Rank & VGM Score: The company carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or #2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
Northward Estimate Revisions: One estimate for the current year moved north over the past seven days versus no southward revisions, reflecting growing analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for the current year increased 0.2%.
Positive Earnings Surprise History: Darden Restaurants has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 2.3%.
Darden Restaurants, Inc. Price and EPS Surprise
Darden Restaurants, Inc. Price and EPS Surprise | Darden Restaurants, Inc. Quote
Strong Growth Prospects: The Zacks Consensus Estimate for fiscal 2018 earnings of $4.44 reflects year-over-year growth of 10.4%. Moreover, earnings are expected to register 9.7% growth in fiscal 2019. The stock has long-term expected earnings per share growth rate of 10.3%.
Growth Drivers: The acquisition ofCheddar's (Cheddar's Scratch Kitchen) acquisition has added an undisputed casual dining value leader to Darden's portfolio of differentiated brands and further enhanced its scale. We believe that Cheddar's restaurant level economics are very attractive, which aids in providing a strong return on investment.
Thus, Cheddar's seems to be a great fit in the company’s portfolio. Besides complementing its existing brands, it is also expected to attract customers given its extensive appeal. This in turn should drive Darden’s comps and resultantly sales.
In fact, as the company progresses with the integration of Cheddar’s, it gains more confidence in its synergy estimates. Management expects to realize synergies of $22 million to $27 million by the end of fiscal 2019 (up from previously projected range of $20 million to $25 million).
The Brand Renaissance Plan for Olive Garden is expected to boost the top line, going forward. The plan includes simplifying kitchen systems, improving sales planning and scheduling, operational excellence to improve guest experience, developing new core menu items, allowing customization and making smarter promotional investments.
Also, the brand is focusing on remodeling and bar refreshes. The revamped restaurants are already generating high same-restaurant sales and returns. In fact, the remodeling program gained momentum in the last couple of quarters and the company intends to continue investing in re-modeling for optimal returns.
Darden is also focusing on technology-driven initiatives, like the system wide rollout of tablets in order to capitalize on the digital wave that has hit the U.S. fast casual restaurant sector. This initiative has boosted sales for the past few quarters and is expected to do so, going forward.
Meanwhile, Olive Garden’s To Go business, which offers online ordering at selected locations, is also growing rapidly (increasing 12% year over year in the fiscal first quarter). The company has also launched catering in the United States, which is expected to add to its top line.
Initiatives to attract guests at LongHorn by focusing on core menu, culinary innovation and providing regional flavors also bode well. Darden is also working on its marketing strategy to improve execution; customer relationship management and digital advertising as well as a strong promotional pipeline that leverage the segment’s expertise.
Further, the company continues to focus on strengthening its in-restaurant execution through strategic investments in quality and simplification of operations in order to augment the guest experience. Owing to these efforts, segment comps have grown for the past 18 consecutive quarters.
Meanwhile, Capital Grille, Yard House, Seasons 52, Bahama Breeze and Eddie V have also posted positive comps in most of the quarters since the beginning of fiscal 2014. Its sales are driven by various initiatives undertaken and personalized services, which should also aid long-term growth.
The company is focusing on an aggressive cost management plan, under which it has been able to significantly cut operating costs. In fact, for fiscal 2018, the company expects 10-40 basis points year-over-year margin expansion as a result of cost savings. Moreover, the company plans to reinvest any incremental savings into pricing and long-term growth drivers for the business, particularly emphasizing on enhancing quality to drive market share gains.
Other Stocks to Consider
Some stocks in the same space are Famous Dave's of America, Inc. (DAVE - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Good Times Restaurants, Inc. (GTIM - Free Report) .
While Famous Dave's of America sports a Zacks Rank #1, Arcos Dorados and Good Times Restaurants carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
One estimate for the current year moved north over the past 60 days versus no southward revisions in case of all three companies.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Click here to see them >>