Darden Restaurants, Inc. (NYSE: DRI) stock recovered over 2.3% on September 27th, 2017 (as of 11:45AM EDT; Source: Google finance) post analysts from Maxim Group and Robert W. Baird upgraded the stock. Maxim Group upgraded the stock to “Buy” from “Hold” rating while Robert W. Baird gave an Outperform rating from the Neutral rating.
The shares in the Florida-based company, had hit a high in June due to the turnaround of Olive Garden, its popular Italian restaurant chain. Darden said same-store sales rose 1.7 per cent, less than the 2.1 per cent rise the market was expecting. It is also a slowdown from the 3.3 per cent growth recorded in the previous quarter. Within this, Olive Garden, DRI’s largest chain by stores and revenue, reported same-store sales growth of 1.9 per cent, below the 2.5 per cent growth analysts had predicted.
Darden Restaurants has reported the adjusted earnings per share of 99 cents in the first quarter of FY 18, beating the analysts’ estimates for the adjusted earnings per share of 98 cents, according to a poll of analysts by Zacks Investment Research. The company had reported the adjusted revenue growth of 12.9 percent to $1.94 billion in the first quarter of FY 18, beating analyst estimates of $1.93 billion. Both Olive Garden and LongHorn Steakhouse seeing key sales gains and also edged out expectations. The sales grew due to the integration of results of Cheddar’s Scratch Kitchen and 21 other new restaurants.
DRI expects full-year earnings in the range of $4.38 to $4.50 per share. The estimate, which includes the effects of Hurricanes Harvey and Irma, is in line with Wall Street projections of $4.47.
Moreover, hurricanes Harvey derailed financial results of Orlando-based Darden Restaurants, where it has a heavy presence, especially with newly acquired Cheddar’s Scratch Kitchen. And Irma will hurt worse. The two storms have temporarily closed hundreds of restaurants and may have resulted in nearly $5.6 million in lost profits. Further, in the first quarter Cheddar’s Scratch Kitchen sales fell 1.4 percent compared to the year before.
DRI is also building more restaurants, adding four new Olive Gardens since last year, 8 new LongHorn Steakhouses. The company’s specialty restaurant division added 11 new locations.
DRI stock has fallen 14.2% in the last three months (as of 11:47AM EDT on September 27th, 2017; Source: Google Finance).