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Darden Restaurants, Inc. (DRI - Free Report) reported third-quarter fiscal 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The metrics increased on a year-over-year basis.
Darden president & CEO Rick Cardenas, stated, "I'm proud that we significantly exceeded the industry for both same-restaurant sales and traffic this quarter, outperforming even more on traffic than on sales. Our ability to invest in pricing below inflation over time provides strong value to our guests and reinforces the power of our strategy and our restaurant teams' commitment to being brilliant with the basics."
Earnings & Revenues
During the fiscal third quarter, Darden reported adjusted earnings per share (EPS) of $2.34, beating the Zacks Consensus Estimate of $2.24. In the prior-year quarter, DRI reported an adjusted EPS of $1.93.
Darden Restaurants, Inc. Price, Consensus and EPS Surprise
Total sales during the quarter came in at $2,786.2 million, beating the consensus mark of $2,723 million. Sales increased 13.8% from the prior-year quarter’s level on solid blended same-restaurant sales of 11.7%. The opening of 35 net new restaurants added to the positives.
Sales by Segments
Darden reports business under four segments, Olive Garden, LongHorn Steakhouse, Fine Dining, which includes The Capital Grille and Eddie V's and Other Business.
During the fiscal third quarter, sales at Olive Garden increased 13.9% year over year to $1,301.2 million. Comps in the segment rose 12.3% year over year compared with a 7.6% growth reported in the previous quarter.
At LongHorn Steakhouse, sales were up 13.5% year over year to $695.5 million. Comps in the segment climbed 10.8% year over year compared with a 7.3% growth reported in the previous quarter.
Sales in Fine Dining soared 13.2% year over year to $235.6 million. Comps in the segment increased 11.7% year over year compared with a 5.9% growth reported in the previous quarter.
Sales at Other Business rose 14.1% year over year to $553.9 million. Comps in the Other Business rose 11.7% year over year compared with a 7.1% increase reported in the previous quarter.
Operating Highlights
In the fiscal third quarter, total operating costs and expenses increased 13.4% year over year to $2,436.3 million. This escalation was primarily due to a rise in food and beverage costs, restaurant expenses and labor costs.
Balance Sheet
As of Feb 26, 2023, cash and cash equivalents came in at $275.3 million compared with $240.7 million as of Nov 27, 2022.
Inventories during the fiscal third quarter came in at $305.9 million compared with $296.1 in the previous quarter. Long-term debt as of Feb 26, 2022, was $880.9 million compared with $885.8 million as of Nov 27, 2022.
During the fiscal third quarter, Darden’s board of directors repurchased approximately 0.9 million shares of its common stock worth approximately $124 million. As of Feb 26, the company stated the availability of approximately $687 million under the $1 billion repurchase program.
Meanwhile, the company declared a quarterly cash dividend of $1.21 per share. The dividend will be payable on May 1, 2023, to shareholders of record as of Apr 10, 2023.
Fiscal 2023 Outlook
For fiscal 2023, the company expects sales to be approximately $10.45-$10.5 billion compared with the previous projection of $10.3-$10.45 billion. Same-restaurant sales in fiscal 2023 are anticipated to be 6.5-7% compared with the previous expectation of 5-6.5%. EPS from continuing operations are anticipated in the band of $7.85-$8 compared with the previous guidance of $7.60-$8. Its mid-point of $7.9 is higher than the Zacks Consensus Estimate of $7.85.
The company expects to open 55 net new restaurants and projects total capital spending of $550-$575 million in fiscal 2023.
Some other top-ranked stocks in the same space include Chuy's Holdings, Inc. (CHUY - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Bloomin' Brands, Inc. (BLMN - Free Report) .
Chuy’s Holdings currently sports a Zacks Rank #1. CHUY has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have increased 30.1% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 10.8% and 19%, respectively, from the corresponding year-ago period’s levels.
Arcos Dorados currently sports a Zacks Rank #1. ARCO has a long-term earnings growth of 7.8%. Shares of the company have declined 0.7% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales and EPS suggests growth of 8% and 11.4%, respectively, from the year-ago period’s levels.
Bloomin' Brands currently sports a Zacks Rank #1. BLMN has a long-term earnings growth rate of 12.3%. The stock has gained 23.2% in the past year.
The Zacks Consensus Estimate for Bloomin' Brands 2024 sales and EPS suggests growth of 2.1% and 4.4%, respectively, from the year-ago period’s reported levels.
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Darden (DRI) Q3 Earnings & Revenue Beat Estimates, Rise Y/Y
Darden Restaurants, Inc. (DRI - Free Report) reported third-quarter fiscal 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The metrics increased on a year-over-year basis.
Darden president & CEO Rick Cardenas, stated, "I'm proud that we significantly exceeded the industry for both same-restaurant sales and traffic this quarter, outperforming even more on traffic than on sales. Our ability to invest in pricing below inflation over time provides strong value to our guests and reinforces the power of our strategy and our restaurant teams' commitment to being brilliant with the basics."
Earnings & Revenues
During the fiscal third quarter, Darden reported adjusted earnings per share (EPS) of $2.34, beating the Zacks Consensus Estimate of $2.24. In the prior-year quarter, DRI reported an adjusted EPS of $1.93.
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 $2,786.2 million, beating the consensus mark of $2,723 million. Sales increased 13.8% from the prior-year quarter’s level on solid blended same-restaurant sales of 11.7%. The opening of 35 net new restaurants added to the positives.
Sales by Segments
Darden reports business under four segments, Olive Garden, LongHorn Steakhouse, Fine Dining, which includes The Capital Grille and Eddie V's and Other Business.
During the fiscal third quarter, sales at Olive Garden increased 13.9% year over year to $1,301.2 million. Comps in the segment rose 12.3% year over year compared with a 7.6% growth reported in the previous quarter.
At LongHorn Steakhouse, sales were up 13.5% year over year to $695.5 million. Comps in the segment climbed 10.8% year over year compared with a 7.3% growth reported in the previous quarter.
Sales in Fine Dining soared 13.2% year over year to $235.6 million. Comps in the segment increased 11.7% year over year compared with a 5.9% growth reported in the previous quarter.
Sales at Other Business rose 14.1% year over year to $553.9 million. Comps in the Other Business rose 11.7% year over year compared with a 7.1% increase reported in the previous quarter.
Operating Highlights
In the fiscal third quarter, total operating costs and expenses increased 13.4% year over year to $2,436.3 million. This escalation was primarily due to a rise in food and beverage costs, restaurant expenses and labor costs.
Balance Sheet
As of Feb 26, 2023, cash and cash equivalents came in at $275.3 million compared with $240.7 million as of Nov 27, 2022.
Inventories during the fiscal third quarter came in at $305.9 million compared with $296.1 in the previous quarter. Long-term debt as of Feb 26, 2022, was $880.9 million compared with $885.8 million as of Nov 27, 2022.
During the fiscal third quarter, Darden’s board of directors repurchased approximately 0.9 million shares of its common stock worth approximately $124 million. As of Feb 26, the company stated the availability of approximately $687 million under the $1 billion repurchase program.
Meanwhile, the company declared a quarterly cash dividend of $1.21 per share. The dividend will be payable on May 1, 2023, to shareholders of record as of Apr 10, 2023.
Fiscal 2023 Outlook
For fiscal 2023, the company expects sales to be approximately $10.45-$10.5 billion compared with the previous projection of $10.3-$10.45 billion. Same-restaurant sales in fiscal 2023 are anticipated to be 6.5-7% compared with the previous expectation of 5-6.5%. EPS from continuing operations are anticipated in the band of $7.85-$8 compared with the previous guidance of $7.60-$8. Its mid-point of $7.9 is higher than the Zacks Consensus Estimate of $7.85.
The company expects to open 55 net new restaurants and projects total capital spending of $550-$575 million in fiscal 2023.
Zacks Rank & Other Key Picks
Darden currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Some other top-ranked stocks in the same space include Chuy's Holdings, Inc. (CHUY - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Bloomin' Brands, Inc. (BLMN - Free Report) .
Chuy’s Holdings currently sports a Zacks Rank #1. CHUY has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have increased 30.1% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 10.8% and 19%, respectively, from the corresponding year-ago period’s levels.
Arcos Dorados currently sports a Zacks Rank #1. ARCO has a long-term earnings growth of 7.8%. Shares of the company have declined 0.7% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2024 sales and EPS suggests growth of 8% and 11.4%, respectively, from the year-ago period’s levels.
Bloomin' Brands currently sports a Zacks Rank #1. BLMN has a long-term earnings growth rate of 12.3%. The stock has gained 23.2% in the past year.
The Zacks Consensus Estimate for Bloomin' Brands 2024 sales and EPS suggests growth of 2.1% and 4.4%, respectively, from the year-ago period’s reported levels.