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Can Darden (DRI) Keep its Earnings Streak Alive in Q2?
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Darden Restaurants, Inc. (DRI - Free Report) is scheduled to report second-quarter fiscal 2017 financial numbers on Dec 20, before the opening bell.
Last quarter, Darden had posted a 6.02% positive earnings surprise. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 9.32%.
Let’s see how things are shaping up for this announcement.
Darden’s earnings have surpassed the Zacks Consensus Estimate over the past eight quarters. Positive comps growth and costs-saving initiatives are driving the bottom line and are expected to boost the second-quarter results as well.
Meanwhile, sales initiatives like simplifying kitchen systems, improving in-restaurant execution to enhance guest experience, menu innovation along with technology-driven moves should drive the top line in the to-be-reported quarter. Moreover, the company’s Olive Garden Brand Renaissance plan – aimed to turn around its Olive Garden business – has started reaping benefits and we expect the improvement to continue in the second quarter.
However, increased labor costs and a non-franchised business model might dampen the company’s profits, while a soft consumer spending environment in the U.S. restaurant space might limit revenue growth.
Earnings Whispers
Our proven model does not conclusively show that Darden is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as elaborated below.
Zacks ESP: Darden has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 63 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Darden has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +0.80% and a Zacks Rank #3.
Panera Bread Company has an Earnings ESP of +0.50% and a Zacks Rank #3.
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Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
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Can Darden (DRI) Keep its Earnings Streak Alive in Q2?
Darden Restaurants, Inc. (DRI - Free Report) is scheduled to report second-quarter fiscal 2017 financial numbers on Dec 20, before the opening bell.
Last quarter, Darden had posted a 6.02% positive earnings surprise. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 9.32%.
Let’s see how things are shaping up for this announcement.
DARDEN RESTRNT Price and EPS Surprise
DARDEN RESTRNT Price and EPS Surprise | DARDEN RESTRNT Quote
Factors Likely to Influence this Quarter
Darden’s earnings have surpassed the Zacks Consensus Estimate over the past eight quarters. Positive comps growth and costs-saving initiatives are driving the bottom line and are expected to boost the second-quarter results as well.
Meanwhile, sales initiatives like simplifying kitchen systems, improving in-restaurant execution to enhance guest experience, menu innovation along with technology-driven moves should drive the top line in the to-be-reported quarter. Moreover, the company’s Olive Garden Brand Renaissance plan – aimed to turn around its Olive Garden business – has started reaping benefits and we expect the improvement to continue in the second quarter.
However, increased labor costs and a non-franchised business model might dampen the company’s profits, while a soft consumer spending environment in the U.S. restaurant space might limit revenue growth.
Earnings Whispers
Our proven model does not conclusively show that Darden is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as elaborated below.
Zacks ESP: Darden has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 63 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Darden has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Texas Roadhouse, Inc. (TXRH - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +0.80% and a Zacks Rank #3.
Panera Bread Company has an Earnings ESP of +0.50% and a Zacks Rank #3.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>