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Darden (DRI) Rises 21.8% in 6 Months: What's Driving the Stock?
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Darden Restaurants, Inc. (DRI - Free Report) is poised to benefit from digitalization, menu innovation and other sales-building initiatives. Also, increased focus on off-premise business bodes well.
In the past six months, shares of Darden have gained 21.8% compared with the industry’s 19.7% growth. An upward revision in earnings estimates for fiscal 2023 reflects analysts’ optimism regarding the company’s growth potential. In the past 30 days, the Zacks Consensus Estimate for fiscal 2023 earnings has moved up 1.4% to $7.91 per share.
Factors Driving Growth
Darden focuses on technological enhancements to drive growth. In fiscal 2022, the company implemented new technological platforms, paving the path for improved digital engagement and strengthening marketing and analytics capabilities. Also, it continued improving its online and mobile ordering system (for Olive Garden and LongHorn Steakhouse) and accelerating the rollout of online and mobile ordering and payment systems across other brands. During third-quarter fiscal 2023, 62% of all off-premise sales were placed digitally.
The company strives to attract guests by focusing on the core menu, culinary innovation and providing regional flavors. It is also working on simplifying kitchen systems, improving sales planning and scheduling, improving guest experience, allowing menu customizations and making smarter promotional investments.
Image Source: Zacks Investment Research
The company emphasized on developing sophisticated customer relationship management programs, data analytics and data-driven marketing approaches to target existing and potential guests across its portfolio of brands. The improvements in the business model are likely to reinforce its ability to boost restaurant value across its brands.
Increased focus on off-premise business bodes well. During third-quarter fiscal 2023, off-premise sales contributed 26% to total sales at Olive Garden, 14% at LongHorn and 12% at Cheddar's Scratch Kitchen. The company has been benefitting from technological enhancements regarding online ordering and To Go capacity management. Given the solid feedback on account of enhanced customer experience and reduced friction, the company expects off-premise sales to remain elevated for some time.
Darden’s acquisition of the small restaurant chain, Cheddar's Scratch Kitchen (Cheddar's), in April 2017 added an undisputed casual dining value to the company’s portfolio of differentiated brands. It also helped Darden enhance its scale. Management made significant operational readjustments to the brand, which is expected to reap long-term benefits. The company considers that Cheddar has significant prospects for long-term growth. DRI stated that it anticipates restaurant-level margins to be well in the high teens when Cheddar’s reaches 100% of the pre-COVID sales. For fiscal 2023, the company anticipates a year-over-year increase in Cheddar restaurant openings.
Chuy’s Holdings currently sports a Zacks Rank #1 (Strong Buy). CHUY has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have increased 47.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
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 9.7% 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% in the past year.
The Zacks Consensus Estimate for Bloomin' Brands 2024 sales and EPS suggests growth of 2.4% and 5.5%, respectively, from the year-ago period’s reported levels.
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Darden (DRI) Rises 21.8% in 6 Months: What's Driving the Stock?
Darden Restaurants, Inc. (DRI - Free Report) is poised to benefit from digitalization, menu innovation and other sales-building initiatives. Also, increased focus on off-premise business bodes well.
In the past six months, shares of Darden have gained 21.8% compared with the industry’s 19.7% growth. An upward revision in earnings estimates for fiscal 2023 reflects analysts’ optimism regarding the company’s growth potential. In the past 30 days, the Zacks Consensus Estimate for fiscal 2023 earnings has moved up 1.4% to $7.91 per share.
Factors Driving Growth
Darden focuses on technological enhancements to drive growth. In fiscal 2022, the company implemented new technological platforms, paving the path for improved digital engagement and strengthening marketing and analytics capabilities. Also, it continued improving its online and mobile ordering system (for Olive Garden and LongHorn Steakhouse) and accelerating the rollout of online and mobile ordering and payment systems across other brands. During third-quarter fiscal 2023, 62% of all off-premise sales were placed digitally.
The company strives to attract guests by focusing on the core menu, culinary innovation and providing regional flavors. It is also working on simplifying kitchen systems, improving sales planning and scheduling, improving guest experience, allowing menu customizations and making smarter promotional investments.
Image Source: Zacks Investment Research
The company emphasized on developing sophisticated customer relationship management programs, data analytics and data-driven marketing approaches to target existing and potential guests across its portfolio of brands. The improvements in the business model are likely to reinforce its ability to boost restaurant value across its brands.
Increased focus on off-premise business bodes well. During third-quarter fiscal 2023, off-premise sales contributed 26% to total sales at Olive Garden, 14% at LongHorn and 12% at Cheddar's Scratch Kitchen. The company has been benefitting from technological enhancements regarding online ordering and To Go capacity management. Given the solid feedback on account of enhanced customer experience and reduced friction, the company expects off-premise sales to remain elevated for some time.
Darden’s acquisition of the small restaurant chain, Cheddar's Scratch Kitchen (Cheddar's), in April 2017 added an undisputed casual dining value to the company’s portfolio of differentiated brands. It also helped Darden enhance its scale. Management made significant operational readjustments to the brand, which is expected to reap long-term benefits. The company considers that Cheddar has significant prospects for long-term growth. DRI stated that it anticipates restaurant-level margins to be well in the high teens when Cheddar’s reaches 100% of the pre-COVID sales. For fiscal 2023, the company anticipates a year-over-year increase in Cheddar restaurant openings.
Zacks Rank & Other Key Picks
Darden currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Zacks Retail-Wholesale sector are 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 (Strong Buy). CHUY has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have increased 47.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
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 9.7% 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% in the past year.
The Zacks Consensus Estimate for Bloomin' Brands 2024 sales and EPS suggests growth of 2.4% and 5.5%, respectively, from the year-ago period’s reported levels.