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Tale of the Tape

Zacks Equity Research

Darden Restaurants (DRI) Tops Q1 Earnings, Lags Revenues
October 04, 2016


Trades from $3

Darden Restaurants, Inc. (DRI - Analyst Report) is one of the largest casual dining restaurant operators. Beginning fiscal fourth quarter 2015, the company began reporting its business in four segments: Olive Garden, LongHorn Steakhouse, Fine Dining, which includes The Capital Grille and Eddie V's, and Other Business.

Most of Darden’s brands have been witnessing growth over the past three to four quarters on the back of sales initiatives like simplifying kitchen systems, menu innovation and technology-driven moves. Moreover, the company’s Olive Garden Brand Renaissance plan – aimed to turn around its business – has started reaping benefits. Also, the company’s efforts to check costs are commendable.

However, Darden’s higher costs, limited international presence along with a soft consumer spending environment raises concern.

Investors should note that the consensus estimate for DRI has hardly witnessed any significant movement over the last 60 days. Meanwhile, DRI’s earnings have been strong over the past few quarters. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 12.12%. Revenues also posted positive surprises in two of the trailing four quarters.

DARDEN RESTRNT Price and EPS Surprise



DRI currently has a Zacks Rank #3 (Hold) but that could change following Darden’s earnings report which was just released. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here..

We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: DRI beats on earnings. Our consensus earnings estimate called for earnings per share of 83 cents, and the company reported earnings of 88 cents per share. Investors should note that these figures take out stock option expenses.

Revenues: DRI reported revenues of nearly $1.71 billion, slightly lagging the Zacks consensus estimate of $1.72 billion.

Key Stats to Note: In first-quarter fiscal 2017, the company posted comps growth of 1.3% with comps at Olive Garden increasing 2%.

Stock Price Impact: At the time of writing, the stock price of Darden was up nearly 6% during pre-market trading hours following the earnings release.

Check back later for our full write up on this DRI earnings report later!

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