Volatile stock to watch: Darden Restaurants, Inc. (NYSE: DRI)

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Darden Restaurants, Inc. (NYSE: DRI) stock fell over 5.07% on September 19th, 2019 and continued its pressure on 20th September, 2019 (as of 11:01 am GMT-4; Source: Google finance) after the company posted mixed results for the first quarter of FY 20. Olive Garden has posted growth in sales and profit in the first quarter, due to positive same-restaurant sales and net new restaurant growth. Segment profit margin expanded by 40 basis points, by leveraging the same-restaurant sales growth and managing cost-effectively. LongHorn also posted growth of sales and profit in the first quarter, due to positive same-restaurant sales and net new restaurant growth. Fine Dining has posted growth in sales and profit in the quarter as well, due to a positive same-restaurant sales and net new restaurant growth. Sales for the other business segment rose 1.8%, on the back of net new restaurants.

DRI in the first quarter of FY 20 has reported the adjusted earnings per share of $1.38, beating the analysts’ estimates for the adjusted earnings per share of $1.36, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 3.5 percent to $2.13 billion in the first quarter of FY 20, missing the analysts’ estimates for revenue of $2.14 billion. The revenue growth is due to 2.6% growth from the addition of 40 net new restaurants and same-restaurant sales growth of 0.9%.

DRI has declared a regular quarterly cash dividend of $0.88 per share, payable on November 1, 2019 to shareholders of record at the close of business on October 10, 2019. During the first quarter 2020, the Company had repurchased approximately 0.8 million shares of its common shares. This is for a total cost of approximately $95 million. The company has authorized a new share repurchase program under which the Company may repurchase up to $500 million of its outstanding common shares.

For fiscal 2020, the company expects total sales growth to be in the range of 5.3% to 6.3%, including approximately 2% growth related to the 53rd week, same-restaurant sales growth to be in the range of 1% to 2%, approximately 50 gross and 44 net new restaurant openings, total capital spending to be in the range of $450 to $500 million, total inflation to be of approximately 2.5%, effective tax rate to be in the range of 10% to 11% and diluted net earnings per share from continuing operations to be in the range of $6.30 to $6.45.

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