Back to top

Image: Bigstock

Darden Restaurants (DRI) Outpaces Stock Market Gains: What You Should Know

Read MoreHide Full Article

Darden Restaurants (DRI - Free Report) closed at $113.28 in the latest trading session, marking a +0.6% move from the prior day. This change outpaced the S&P 500's 0.05% gain on the day. At the same time, the Dow added 0.11%, and the tech-heavy Nasdaq gained 0.11%.

Coming into today, shares of the owner of Olive Garden and other chain restaurants had gained 3.17% in the past month. In that same time, the Retail-Wholesale sector gained 1.18%, while the S&P 500 gained 4.32%.

Investors will be hoping for strength from DRI as it approaches its next earnings release. On that day, DRI is projected to report earnings of $1.07 per share, which would represent year-over-year growth of 16.3%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.06 billion, up 4.29% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.38 per share and revenue of $9.03 billion. These totals would mark changes of +9.62% and +6.08%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for DRI. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.01% lower within the past month. DRI is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that DRI has a Forward P/E ratio of 17.65 right now. This valuation marks a discount compared to its industry's average Forward P/E of 23.05.

It is also worth noting that DRI currently has a PEG ratio of 1.99. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Retail - Restaurants was holding an average PEG ratio of 2.12 at yesterday's closing price.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 81, putting it in the top 32% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Darden Restaurants, Inc. (DRI) - free report >>

Published in