Darden Restaurants (NYSE:DRI) Shares Gap Up Following Better-Than-Expected Earnings

Darden Restaurants, Inc. (NYSE:DRI)’s stock price gapped up before the market opened on Thursday following a better than expected earnings announcement. The stock had previously closed at $151.96, but opened at $157.48. Darden Restaurants shares last traded at $153.30, with a volume of 457,825 shares.

The restaurant operator reported $2.65 EPS for the quarter, topping analysts’ consensus estimates of $2.61 by $0.04. Darden Restaurants had a return on equity of 49.94% and a net margin of 9.24%. The company had revenue of $3 billion for the quarter, compared to the consensus estimate of $2.97 billion. During the same quarter last year, the business posted $2.58 EPS. Darden Restaurants’s quarterly revenue was up 8.3% compared to the same quarter last year.

Darden Restaurants Cuts Dividend

The company also recently announced a quarterly dividend, which will be paid on Thursday, August 15th. Shareholders of record on Thursday, July 11th will be issued a dividend of $1.29 per share. This represents a $5.16 dividend on an annualized basis and a yield of 3.37%. The ex-dividend date of this dividend is Wednesday, July 10th. Darden Restaurants’s dividend payout ratio is presently 61.43%.

Darden Restaurants announced that its Board of Directors has initiated a stock repurchase program on Thursday, March 21st that authorizes the company to repurchase $1.00 billion in outstanding shares. This repurchase authorization authorizes the restaurant operator to reacquire up to 5% of its shares through open market purchases. Shares repurchase programs are generally an indication that the company’s management believes its stock is undervalued.

Analyst Ratings Changes

Several analysts recently issued reports on the company. Barclays cut their price target on Darden Restaurants from $187.00 to $180.00 and set an “overweight” rating on the stock in a report on Friday, June 14th. KeyCorp cut their price target on Darden Restaurants from $177.00 to $170.00 and set an “overweight” rating on the stock in a report on Thursday, June 13th. Morgan Stanley reissued an “overweight” rating and issued a $175.00 price target on shares of Darden Restaurants in a report on Friday. TD Cowen reissued a “buy” rating and issued a $170.00 price target on shares of Darden Restaurants in a report on Thursday. Finally, Wedbush reissued an “outperform” rating and issued a $170.00 price target on shares of Darden Restaurants in a report on Thursday. Five equities research analysts have rated the stock with a hold rating and sixteen have issued a buy rating to the company’s stock. Based on data from MarketBeat, the stock presently has an average rating of “Moderate Buy” and an average price target of $173.76.

Insider Activity at Darden Restaurants

In other Darden Restaurants news, SVP Matthew R. Broad sold 4,707 shares of the business’s stock in a transaction dated Thursday, April 25th. The stock was sold at an average price of $156.15, for a total value of $734,998.05. Following the transaction, the senior vice president now owns 19,179 shares in the company, valued at $2,994,800.85. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through the SEC website. In other news, Director William S. Simon sold 1,219 shares of the company’s stock in a transaction dated Monday, April 8th. The stock was sold at an average price of $158.21, for a total transaction of $192,857.99. Following the completion of the sale, the director now owns 6,281 shares in the company, valued at approximately $993,717.01. The transaction was disclosed in a filing with the SEC, which is accessible through this hyperlink. Also, SVP Matthew R. Broad sold 4,707 shares of the company’s stock in a transaction dated Thursday, April 25th. The stock was sold at an average price of $156.15, for a total value of $734,998.05. Following the sale, the senior vice president now owns 19,179 shares of the company’s stock, valued at approximately $2,994,800.85. The disclosure for this sale can be found here. Over the last ninety days, insiders have sold 13,599 shares of company stock valued at $2,197,891. Company insiders own 0.85% of the company’s stock.

Institutional Trading of Darden Restaurants

Large investors have recently made changes to their positions in the stock. Raymond James & Associates raised its holdings in shares of Darden Restaurants by 11.9% in the 1st quarter. Raymond James & Associates now owns 2,202,711 shares of the restaurant operator’s stock worth $368,183,000 after buying an additional 234,410 shares in the last quarter. Wellington Management Group LLP grew its position in Darden Restaurants by 10.3% during the 4th quarter. Wellington Management Group LLP now owns 1,809,155 shares of the restaurant operator’s stock worth $297,244,000 after acquiring an additional 169,642 shares during the last quarter. Morgan Stanley grew its position in Darden Restaurants by 13.8% during the 3rd quarter. Morgan Stanley now owns 1,669,789 shares of the restaurant operator’s stock worth $239,148,000 after acquiring an additional 202,139 shares during the last quarter. Earnest Partners LLC grew its position in Darden Restaurants by 5.5% during the 1st quarter. Earnest Partners LLC now owns 1,572,642 shares of the restaurant operator’s stock worth $262,867,000 after acquiring an additional 82,356 shares during the last quarter. Finally, Northern Trust Corp grew its position in Darden Restaurants by 5.4% during the 3rd quarter. Northern Trust Corp now owns 1,467,716 shares of the restaurant operator’s stock worth $210,206,000 after acquiring an additional 75,287 shares during the last quarter. Institutional investors own 93.64% of the company’s stock.

Darden Restaurants Stock Performance

The firm has a market capitalization of $18.30 billion, a P/E ratio of 17.87, a price-to-earnings-growth ratio of 1.60 and a beta of 1.29. The stock has a 50-day moving average of $150.69 and a 200 day moving average of $159.69. The company has a debt-to-equity ratio of 0.63, a quick ratio of 0.25 and a current ratio of 0.39.

Darden Restaurants Company Profile

Darden Restaurants, Inc, together with its subsidiaries, owns and operates full-service restaurants in the United States and Canada. It operates under Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V's Prime Seafood, and Capital Burger brand names.