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Orlando, Florida-based Darden Restaurants, Inc. (DRI) owns and operates full-service restaurants. With a market cap of $20.4 billion, the company owns and operates a variety of seafood and Italian restaurants under a multitude of brand names, serving customers in the U.S. and Canada.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and DRI perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the restaurant industry. Its diverse brand portfolio establishes a strong market presence, catering to varied customer preferences and fostering loyalty. DRI’s effective operational strategies, including cost management and innovative marketing, drive profitability and enhance its reputation.
DRI has slipped 3.2% from its 52-week high of $176.84, achieved on Mar. 4. Over the past three months, DRI stock has gained 11%, outperforming the S&P 500 Index’s ($SPX) 5.2% gains during the same time frame.
However, in the longer term, shares of DRI rose 4.1% on a YTD basis and climbed 19.2% over the past 52 weeks, underperforming SPX’s YTD gains of 20.2% and solid 32.7% returns over the last year.
Despite weak price momentum in the long term, DRI has been trading above its 50-day and 200-day moving averages since mid-August, indicating a bullish trend.
Darden has been underperforming this year due to a decrease in customer traffic, particularly in July. The company operates various sit-down restaurant concepts, with its Fine Dining segment experiencing difficulties, which includes high-end restaurant chains like Capital Grille, Ruth's Chris, and Eddie V. Additionally, the company's margins have been affected by the costs associated with the acquisition of Chuy's.
On Sep. 19, DRI shares closed up more than 8% after reporting its Q1 earnings results. Its adjusted EPS of $1.75 missed Wall Street expectations of $1.81. The company’s revenue was $2.76 billion, missing Wall Street forecasts of $2.8 billion. It has partnered with Uber Technologies, Inc. (UBER) for food delivery, and it is set to begin with Olive Garden later this year.
DRI’s rival, Dine Brands Global, Inc. (DIN), has had a rough ride. DIN's shares plummeted 38.5% on a YTD basis and 41.2% over the past 52 weeks, lagging behind DRI’s gains over the same time frame.
Wall Street analysts are moderately bullish on DRI’s prospects. The stock has a consensus “Moderate Buy” rating from the 25 analysts covering it, and the mean price target of $179.15 suggests a 4.7% potential upside from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
