Do Darden’s Earnings Signal a Broader Restaurant Recovery?
Darden Restaurants released mixed fiscal first-quarter financial results and said it resumed its dividend before the markets opened on Thursday.
Darden Restaurants Inc. (NYSE: DRI | DRI Price Prediction) released its fiscal first-quarter financial results before the markets opened on Thursday. The company posted $0.28 in earnings per share (EPS) and $1.53 billion in revenue. That compares with consensus estimates of $0.05 in EPS and $1.56 billion in revenue, as well as the $1.38 per share and $2.13 billion reported in the same period of last year.
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During the latest quarter, total sales decreased 28.4% year over year, driven by negative blended same-restaurant sales of 29.0% and partially offset by the addition of 14 net new restaurants. In terms of its brands, Darden reported same-restaurant sales as follows:
- Olive Garden, −28.2%
- Longhorn Steakhouse, −18.1%
- Fine Dining, −39.1%
- Other Business, −39.0%
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On the books, Darden’s cash and cash equivalents totaled $654.6 million at the end of the quarter, down from $763.3 million at the end of the previous fiscal year. Considering the steadily improving cash flows in the quarter, and increased confidence in cash flow projections, the firm fully repaid its $270 million term loan in mid-August.
As it stands now, Darden has access to $1.4 billion of liquidity with $655 million of cash on hand and $750 million available through its credit facility.
Looking ahead to the fiscal second quarter, the company expects to see EPS in the range of $0.65 to $0.75 and total sales of roughly 82% of the prior year. Consensus estimates call for $0.35 in EPS and $1.78 billion in revenue for the quarter.
The board of directors declared that it has reinstated a quarterly dividend of $0.30 per share on common stock, which will be payable November 2, to shareholders of record at the close of October 9.
Darden stock traded up about 6% on Thursday, at $95.54 in a 52-week range of $26.15 to $124.01. The consensus price target is $92.67.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
