Darden Restaurants, Inc. DRI is one of the largest casual dining restaurant operators. The company has performed well in fiscal 2015 as comps at all its restaurant chains gained momentum, after a somewhat disappointing performance in fiscal 2014. It seems that the efforts to grow and develop the LongHorn Steakhouse by focusing on its core menu, marketing strategy, customer relationship management, digital advertising and a strong promotional pipeline have been yielding positive results.
Moreover, the company’s Olive Garden Brand Renaissance plan – aimed to turn around its business – appears to have started reaping benefits.
Also, the company is busy reorganizing its segment structure. While in Jul 2014, the company sold one of its brands, Red Lobster, in fiscal fourth quarter 2015, the company began reporting through new segments. Then in November, the company successfully completed its spin-off of select real estate and restaurant assets into Four Corners Property Trust, Inc. Moreover, the company has laid down an aggressive cost management plan, under which it has been able to significantly reduce operating costs.
However, costs related to the implementation of the strategic action plan, renovation of restaurants, technology and other initiatives and higher wage rates is keeping profits under pressure.
The company’s earnings have been strong over the past few quarters. Darden has delivered positive earnings surprises in the past four straight quarters. This translates to an average positive earnings surprise of 13.73% for the trailing four quarters. Meanwhile, it beat revenue estimates in three of the trailing four quarters and missed the same in one.
However, investors should also note the recent earnings estimate revisions for DRI, as the consensus estimate has been slightly moving upwards. Currently, DRI has a Zacks Rank #3 (Hold) but that could change following Darden’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: DRI beats on earnings. Our consensus earnings estimate called for earnings per share of 42 cents and the company reported earnings of 54 cents per share.
Revenues: DRI reported revenues of $1.61 billion. It slightly lagged the consensus estimate of $1.63 billion.
Key Stats to Note: The company posted comps growth of 2.9% for fiscal second quarter 2016. All the brands posted positive comps in the quarter.
Darden increased its same-store sales and earnings per share guidance for fiscal 2016.
Stock Price: In-active in pre-market trading.
Check back later for our full write up on this DRI earnings report later!
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