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Darden (DRI) Stock Up 22% in the Past 6 Months: Here's How
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Shares of Darden Restaurants, Inc. (DRI - Free Report) have gained 21.8% in the past six months, compared with the industry’s increase of 12.9%. The company is benefiting from robust off-premise sales, efforts to attract guests at LongHorn and other units as well as other sales-building efforts.
This Zacks Rank #2 (Buy) company has an impressive long-term earnings growth rate of 9.8%. The company’s sales and earnings in fiscal 2023 are likely to witness growth of 7.9% and 5.5%, respectively.
Let’s delve deeper to find out the factors that make Darden an attractive pick.
Growth Drivers
The company continues to benefit from robust off-premise sales. In second-quarter fiscal 2023, off-premise sales contributed 25% to total sales at Olive Garden, 14% at LongHorn and 13% at Cheddar's Scratch Kitchen. Notably, technological enhancements in online ordering, the introduction of To Go capacity management and Curbside I'm Here notification have benefited the company.
On the other hand, at LongHorn, the company strives to attract guests by focusing on its core menu, culinary innovation and regional flavors. It is also working on its marketing strategy to improve execution; customer relationship management and digital advertising as well as promotional pipeline that leverages the segment’s expertise.
The company has been focusing on strengthening its in-restaurant execution through investments in quality, improving staffing levels and simplifying operations to enhance the guest experience. Sales are being supported by various initiatives and personalized services, which are likely to drive long-term growth as well. During the fiscal second quarter, sales at LongHorn were up 9.7% year over year to $600.5 million.
Image Source: Zacks Investment Research
In order to boost the performance of the Olive Garden brand, the company implemented a set of initiatives under its Brand Renaissance Plan. These included simplifying kitchen systems, improving sales planning and scheduling, achieving operational excellence to improve guest experience, developing new core menu items, allowing customization and making smarter promotional investments. The revamped restaurants are already generating high same-restaurant sales and returns.
Meanwhile, the company is also focusing on technology-driven initiatives like the system-wide rollout of tablets in order to capitalize on digitization, which has rapidly penetrated the U.S. fast-casual restaurant sector. This initiative has been providing a boost to the company’s sales for the past few quarters. Backed by business-model improvements, sales at Olive Garden increased 9.2% year over year to $1,176.7 million in second-quarter fiscal 2023.
McDonald's carries a Zacks Rank #2. MCD has a long-term earnings growth rate of 8.2%. Shares of MCD have gained 4.2% in the past year.
The Zacks Consensus Estimate for MCD’s 2023 sales and EPS suggests growth of 3.2% and 5.3%, respectively, from the year-ago period’s estimated levels.
Yum! Brands currently carries a Zacks Rank #2. YUM has a long-term earnings growth rate of 11.8%. Shares of YUM have gained 3.4% in the past year.
The Zacks Consensus Estimate for Yum! Brands’ 2023 sales and EPS suggests growth of 6.2% and 15.5%, respectively, from the year-ago period’s projected levels.
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Darden (DRI) Stock Up 22% in the Past 6 Months: Here's How
Shares of Darden Restaurants, Inc. (DRI - Free Report) have gained 21.8% in the past six months, compared with the industry’s increase of 12.9%. The company is benefiting from robust off-premise sales, efforts to attract guests at LongHorn and other units as well as other sales-building efforts.
This Zacks Rank #2 (Buy) company has an impressive long-term earnings growth rate of 9.8%. The company’s sales and earnings in fiscal 2023 are likely to witness growth of 7.9% and 5.5%, respectively.
Let’s delve deeper to find out the factors that make Darden an attractive pick.
Growth Drivers
The company continues to benefit from robust off-premise sales. In second-quarter fiscal 2023, off-premise sales contributed 25% to total sales at Olive Garden, 14% at LongHorn and 13% at Cheddar's Scratch Kitchen. Notably, technological enhancements in online ordering, the introduction of To Go capacity management and Curbside I'm Here notification have benefited the company.
On the other hand, at LongHorn, the company strives to attract guests by focusing on its core menu, culinary innovation and regional flavors. It is also working on its marketing strategy to improve execution; customer relationship management and digital advertising as well as promotional pipeline that leverages the segment’s expertise.
The company has been focusing on strengthening its in-restaurant execution through investments in quality, improving staffing levels and simplifying operations to enhance the guest experience. Sales are being supported by various initiatives and personalized services, which are likely to drive long-term growth as well. During the fiscal second quarter, sales at LongHorn were up 9.7% year over year to $600.5 million.
Image Source: Zacks Investment Research
In order to boost the performance of the Olive Garden brand, the company implemented a set of initiatives under its Brand Renaissance Plan. These included simplifying kitchen systems, improving sales planning and scheduling, achieving operational excellence to improve guest experience, developing new core menu items, allowing customization and making smarter promotional investments. The revamped restaurants are already generating high same-restaurant sales and returns.
Meanwhile, the company is also focusing on technology-driven initiatives like the system-wide rollout of tablets in order to capitalize on digitization, which has rapidly penetrated the U.S. fast-casual restaurant sector. This initiative has been providing a boost to the company’s sales for the past few quarters. Backed by business-model improvements, sales at Olive Garden increased 9.2% year over year to $1,176.7 million in second-quarter fiscal 2023.
Other Stocks to Consider
Some other top-ranked stocks in the Zacks Retail-Wholesale sector are Yum China Holdings, Inc. (YUMC - Free Report) , McDonald's Corporation (MCD - Free Report) and Yum! Brands, Inc. (YUM - Free Report) .
Yum China carries a Zacks Rank #2. YUMC has a long-term earnings growth rate of 11%. Shares of YUMC have gained 24.7% in the past year.
The Zacks Consensus Estimate for Yum China’s 2023 sales and earnings per share (EPS) suggests growth of 14.6% and 58.4%, respectively, from the year-ago period’s estimated levels. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McDonald's carries a Zacks Rank #2. MCD has a long-term earnings growth rate of 8.2%. Shares of MCD have gained 4.2% in the past year.
The Zacks Consensus Estimate for MCD’s 2023 sales and EPS suggests growth of 3.2% and 5.3%, respectively, from the year-ago period’s estimated levels.
Yum! Brands currently carries a Zacks Rank #2. YUM has a long-term earnings growth rate of 11.8%. Shares of YUM have gained 3.4% in the past year.
The Zacks Consensus Estimate for Yum! Brands’ 2023 sales and EPS suggests growth of 6.2% and 15.5%, respectively, from the year-ago period’s projected levels.