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Darden (DRI) Down on Narrower-Than-Expected Loss in Q4
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Darden Restaurants, Inc. (DRI - Free Report) reported fourth-quarter fiscal 2020 results, wherein the bottom line surpassed the Zacks Consensus Estimate, while the top line lagged the same. The company reported better-than-expected earnings for the sixth straight quarter. Following the results, the company’s shares are up 2.2% in pre-market trading session.
The company reported adjusted loss per share of $1.24 per share, narrower than the Zacks Consensus Estimate of loss of $1.59. In the prior-year quarter, the company had reported adjusted earnings per share of $1.76.
Total sales of $1,270.1 million missed the consensus mark of $1,301 million. Moreover, sales declined 43% from the prior-year quarter on account of negative blended same-restaurant sales of 47.7%. Results in the quarter were impacted by the coronavirus pandemic.
Darden Restaurants, Inc. Price, Consensus and EPS Surprise
Darden reports business under four segments — Olive Garden, LongHorn Steakhouse, Fine Dining that includes The Capital Grille and Eddie V's, and Other Business.
Sales at Olive Garden decreased 34% year over year to $730.8 million. Comps declined 8.6% at the segment, against the prior-quarter’s comp growth of 2.1%.
Sales at Fine Dining declined 60.1% to $61.7 million. Comps at The Capital Grille fell 13.6% against growth of 4.2% in the previous quarter. Further, Eddie V's reported comps decline of 15.2%, against a 3.9% improvement in the prior quarter.
Sales at Other Business slumped 61.8% year over year to $184.7 million. Moreover, comps at Seasons 52 declined 18.7% against a comps growth of 3% in the prior quarter. Comps at Yard House were down 17.3% against 1.8% increase in the previous quarter. Moreover, comps fell 20.1% at Bahama Breeze compared with a decline of 0.5% in the preceding quarter.
At LongHorn Steakhouse, sales were down 39.5% to $292.9 million. Comps at the segment decreased 8.8%, against comps growth of 3.9% in the year-ago quarter.
In the reported quarter, comps at Cheddar's decreased 17.1% compared with a decline of 1.6% in the prior-year quarter.
Operating Highlights & Net Income
In the fiscal fourth quarter, total operating costs and expenses decreased 6.9% year over year to $1,862.2 million. The decline can be attributed to an overall decrease in food and beverage costs, restaurant expenses, and labor costs.
Balance Sheet
Cash and cash equivalents as of May 31, 2020, totaled $763.3 million, down from $457.3 million as of May 26, 2019.
Inventories totaled $206.9 million at the end of the reported quarter. Long-term debt as of May 31, 2020, was $928.8 million, up from $927.7 million as of May 26, 2019.
First-quarter 2021 Guidance
Due to uncertainty regarding the future business on account of the pandemic, the company provided first-quarter guidance instead of the full year. The company expects total sales of nearly 70% of prior-year sales. EBITDA is anticipated at $75 million. Earnings per share from continuing operations are anticipated either greater than or equal to $0.00.
The company expects to open 35-40 net new restaurants and total capital spending of $250 to $300 million in fiscal 2021.
Business Updates
The company provided business updates for first-quarter fiscal 2021 to date through Sunday, Jun 21. Blended same-restaurant sales fell 33.2% during the period. Darden, Olive Garden, LongHorn Steakhouse, Fine Dining and Other Business same-restaurant sales declined 33.2%, 31.3%, 24.3%, 48.1% and 42.3%, respectively.
In the past three months, shares of El Pollo Loco Holdings have gained 63.3%.
Domino's and Papa John's have an impressive long-term earnings growth rate of 12.8% and 8%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Darden (DRI) Down on Narrower-Than-Expected Loss in Q4
Darden Restaurants, Inc. (DRI - Free Report) reported fourth-quarter fiscal 2020 results, wherein the bottom line surpassed the Zacks Consensus Estimate, while the top line lagged the same. The company reported better-than-expected earnings for the sixth straight quarter. Following the results, the company’s shares are up 2.2% in pre-market trading session.
The company reported adjusted loss per share of $1.24 per share, narrower than the Zacks Consensus Estimate of loss of $1.59. In the prior-year quarter, the company had reported adjusted earnings per share of $1.76.
Total sales of $1,270.1 million missed the consensus mark of $1,301 million. Moreover, sales declined 43% from the prior-year quarter on account of negative blended same-restaurant sales of 47.7%. Results in the quarter were impacted by the coronavirus pandemic.
Darden Restaurants, Inc. Price, Consensus and EPS Surprise
Darden Restaurants, Inc. price-consensus-eps-surprise-chart | Darden Restaurants, Inc. Quote
Sales by Segments
Darden reports business under four segments — Olive Garden, LongHorn Steakhouse, Fine Dining that includes The Capital Grille and Eddie V's, and Other Business.
Sales at Olive Garden decreased 34% year over year to $730.8 million. Comps declined 8.6% at the segment, against the prior-quarter’s comp growth of 2.1%.
Sales at Fine Dining declined 60.1% to $61.7 million. Comps at The Capital Grille fell 13.6% against growth of 4.2% in the previous quarter. Further, Eddie V's reported comps decline of 15.2%, against a 3.9% improvement in the prior quarter.
Sales at Other Business slumped 61.8% year over year to $184.7 million. Moreover, comps at Seasons 52 declined 18.7% against a comps growth of 3% in the prior quarter. Comps at Yard House were down 17.3% against 1.8% increase in the previous quarter. Moreover, comps fell 20.1% at Bahama Breeze compared with a decline of 0.5% in the preceding quarter.
At LongHorn Steakhouse, sales were down 39.5% to $292.9 million. Comps at the segment decreased 8.8%, against comps growth of 3.9% in the year-ago quarter.
In the reported quarter, comps at Cheddar's decreased 17.1% compared with a decline of 1.6% in the prior-year quarter.
Operating Highlights & Net Income
In the fiscal fourth quarter, total operating costs and expenses decreased 6.9% year over year to $1,862.2 million. The decline can be attributed to an overall decrease in food and beverage costs, restaurant expenses, and labor costs.
Balance Sheet
Cash and cash equivalents as of May 31, 2020, totaled $763.3 million, down from $457.3 million as of May 26, 2019.
Inventories totaled $206.9 million at the end of the reported quarter. Long-term debt as of May 31, 2020, was $928.8 million, up from $927.7 million as of May 26, 2019.
First-quarter 2021 Guidance
Due to uncertainty regarding the future business on account of the pandemic, the company provided first-quarter guidance instead of the full year. The company expects total sales of nearly 70% of prior-year sales. EBITDA is anticipated at $75 million. Earnings per share from continuing operations are anticipated either greater than or equal to $0.00.
The company expects to open 35-40 net new restaurants and total capital spending of $250 to $300 million in fiscal 2021.
Business Updates
The company provided business updates for first-quarter fiscal 2021 to date through Sunday, Jun 21. Blended same-restaurant sales fell 33.2% during the period. Darden, Olive Garden, LongHorn Steakhouse, Fine Dining and Other Business same-restaurant sales declined 33.2%, 31.3%, 24.3%, 48.1% and 42.3%, respectively.
Darden currently has a Zacks Rank #2 (Buy).
Other Key Picks
Some other top-ranked stocks, which warrant a space in the same space include El Pollo Loco Holdings, Inc. (LOCO - Free Report) , Domino's Pizza, Inc. (DPZ - Free Report) and Papa John's International, Inc. (PZZA - Free Report) . Each of these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past three months, shares of El Pollo Loco Holdings have gained 63.3%.
Domino's and Papa John's have an impressive long-term earnings growth rate of 12.8% and 8%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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