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Darden (DRI) Q4 Earnings & Revenue Top Estimates, Rise Y/Y

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Darden Restaurants, Inc. (DRI - Free Report) reported impressive fourth-quarter fiscal 2022 results, with earnings and revenues beating the Zacks Consensus Estimate. The metrics increased on a year-over-year basis. Following the results, the company’s shares moved up 3.5% in the pre-market trading session.

Darden President & CEO Rick Cardenas, stated, "We had a strong quarter despite experiencing high inflation, and fiscal 2022 was a solid year. Darden's competitive advantages enabled our brands to strengthen their business models while our restaurant teams continued to deliver exceptional guest experiences in a challenging operating environment.”

Earnings & Revenues

During the fiscal fourth quarter, Darden reported adjusted earnings per share (EPS) of $2.24, beating the Zacks Consensus Estimate of $2.21 by 1.4%. In the prior-year quarter, DRI had reported an adjusted EPS of $2.03.

Darden Restaurants, Inc. Price, Consensus and EPS Surprise

 

Darden Restaurants, Inc. Price, Consensus and EPS Surprise

Darden Restaurants, Inc. price-consensus-eps-surprise-chart | Darden Restaurants, Inc. Quote

 

Total sales during the quarter came in at $2,602.9 million, beating the consensus mark of $2,544 million by 2.3%. Moreover, sales increased 14.2% from the prior-year quarter’s level on solid blended same-restaurant sales of 11.7%. Also, the opening of 33 net new restaurants added to the positives.

Sales by Segments

Darden reports business under four segments, Olive Garden, LongHorn Steakhouse, Fine Dining that includes The Capital Grille and Eddie V's and Other Business.

During the fiscal fourth quarter, sales at Olive Garden increased 8.2% year over year to $1,193.7 million. Comps in the segment rose 6.5% year over year compared with 29.9% growth reported in the previous quarter.

At LongHorn Steakhouse, sales were up 13.2% year over year to $647.3 million. Comps in the segment climbed 10.6% year over year compared with 31.6% growth reported in the previous quarter.

Sales in Fine Dining soared 40.7% year over year to $210.5 million. Comps in the segment surged 34.5% year over year compared with 85.8% growth reported in the previous quarter.

Sales at Other Business rose 21.5% year over year to $551.4 million. Comps in the Other Business rose 18.5% year over year compared with 55.2% growth reported in the previous quarter.

Operating Highlights

In the fiscal fourth quarter, total operating costs and expenses increased 15.8% year over year to $2,264.7 million. This escalation was primarily due to a rise in food and beverage costs, restaurant expenses and labor costs.

Balance Sheet

As of May 29, 2022, cash and cash equivalents came in at $420.6 million compared with $1,214.7 million as of May 30, 2021.

Inventories during the fiscal fourth quarter came in at $270.6 million compared with $190.8 in the prior-year quarter. Long-term debt as of May 29, 2022, was $901 million compared with $929.8 million as of May 30, 2021.

During the fiscal fourth quarter, Darden’s board of directors repurchased 1.8 million shares of its common stock worth approximately $237 million. During the quarter, the company’s board of directors announced a new $1.00 billion share repurchase program.

The company announced a hike in its quarterly dividend payout. Darden raised its quarterly dividend by 10%, indicating its intention to utilize free cash to boost shareholders’ returns. The company raised the quarterly dividend to $1.21 per share (or $4.84 annually) from the previous payout of $1.10 (or $4.40 annually). The hiked dividend will be paid out on Aug 1, 2022, to shareholders on record as of Jul 8, 2022. 

Fiscal 2022 Highlights

Total sales in fiscal 2022 came in at $9,630 million compared with $7,196.1 million in fiscal 2021.

EPS for fiscal 2022 came in at $7.40 compared with $4.80 in fiscal 2021.

Fiscal 2023 Outlook

For fiscal 2023, the company expects sales to be approximately $10.2-$10.4 billion. Same-restaurant sales in fiscal 2023 is anticipated in the range of 4-6%. EPS from continuing operations are anticipated in the band of $7.40-$8. Its mid-point of $7.7 is lower than the Zacks Consensus Estimate of $8.21.

The company expects to open 55-60 net new restaurants and projects total capital spending of $500-$550 million in fiscal 2023.

Zacks Rank & Key Picks

Darden currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Zacks Retail-Wholesale sector are Dollar Tree Inc. (DLTR - Free Report) , BBQ Holdings, Inc. and Arcos Dorados Holdings Inc. (ARCO - Free Report) .

Dollar Tree sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 13.1%, on average. Shares of the company have gained 52.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Dollar Tree’s 2022 sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the year-ago period’s levels.

BBQ Holdings carries a Zacks Rank #2 (Buy). BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have decreased 33.8% in the past year.

The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and EPS suggests growth of 46.1% and 67.6%, respectively, from the year-ago period’s levels.

Arcos Dorados carries a Zacks Rank #2. Arcos Dorados has a long-term earnings growth of 34.4%. Shares of the company have risen 12.4% in the past year.

The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 16.6% and 83.3%, respectively, from the year-ago period’s levels.


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