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Category: Stock Market and Darden Restaurants
Date: 19 September 2019 Stock Price: $126.80 We take a look at the 1st quarter earnings release of their 2020 fiscal year of Darden Restaurants one of America's leading restaurant groups in the full-service dining space.
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About Darden Restaurants
The Darden family of restaurants features some of the most recognizable and successful brands in full-service dining. Through subsidiaries, we own and operate more than 1,700 restaurants, employ 185,000 people and serve nearly 400 million guests a year.
The image below shows Darden Restaurants different brands
The image below shows Darden Restaurants different brands
Overview of Darden Restaurants' latest earnings report
The numbers we are interested in (for the quarter):
- Sales: $2.133 billion (up from $2.061 billion from the same quarter of the previous year)
- Revenues increased by 3.4% over the last 12 months
- Total Operating Costs: $1.932 billion (up from $1.872 billion for the same quarter of the previous year)
- Operating costs increased by 3.2% over the last 12 months
- Net income: $170.6 million (down from $166. million for the same quarter of the previous year)
- Diluted earnings per share: $1.37 (up from $1.32 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 124.6 million (down from 125.8 million for the same quarter of the previous year)
- Cash and cash equivalents: $350.8 million
- Cash and cash equivalents per share: $2.85
- Cash and cash equivalents makes up 2.24% of Darden Restaurants' market capital
- Cash and cash equivalents makes up 3.6% of Darden Restaurants' total assets
- Inventories: $199 million
- Inventories makes up 2.04% of Darden Restaurants' total assets
- Stockholders equity: $2.381 billion
- Stockholders equity per share: $19.10
- Darden restaurants is trading at 6.6 times its stockholders equity per share
Darden Restaurants' management commentary on the results and earnings guidance
ORLANDO, Fla., Sept. 19, 2019 /PRNewswire/ -- Darden Restaurants, Inc., (NYSE: DRI) today reported its financial results for the first quarter ended August 25, 2019.
"I'm pleased with our results this quarter as we continued to gain market share," said CEO Gene Lee. "Our teams remained focused on improving the guest experience by focusing on our back-to-basics operating philosophy and leveraging our competitive advantages, all while managing costs effectively."
Dividend Declared
Darden's Board of Directors declared a regular quarterly cash dividend of $0.88 per share on the Company's outstanding common stock. The dividend is payable on November 1, 2019 to shareholders of record at the close of business on October 10, 2019.
Share Repurchase Program
During the quarter, the Company repurchased approximately 0.8 million shares of its common stock for a total cost of approximately $95 million. In addition, yesterday, Darden's Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $500 million of its outstanding common stock. This repurchase program does not have an expiration and replaces the previously existing share repurchase authorization.
Fiscal 2020 Financial Outlook
The Company reaffirmed all aspects of its financial outlook for fiscal 2020:
"I'm pleased with our results this quarter as we continued to gain market share," said CEO Gene Lee. "Our teams remained focused on improving the guest experience by focusing on our back-to-basics operating philosophy and leveraging our competitive advantages, all while managing costs effectively."
Dividend Declared
Darden's Board of Directors declared a regular quarterly cash dividend of $0.88 per share on the Company's outstanding common stock. The dividend is payable on November 1, 2019 to shareholders of record at the close of business on October 10, 2019.
Share Repurchase Program
During the quarter, the Company repurchased approximately 0.8 million shares of its common stock for a total cost of approximately $95 million. In addition, yesterday, Darden's Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $500 million of its outstanding common stock. This repurchase program does not have an expiration and replaces the previously existing share repurchase authorization.
Fiscal 2020 Financial Outlook
The Company reaffirmed all aspects of its financial outlook for fiscal 2020:
- Total sales growth of 5.3% to 6.3%, including approximately 2% growth related to the 53rd week
- Same-restaurant sales growth of 1% to 2%
- Approximately 50 gross and 44 net new restaurant openings
- Total capital spending of $450 to $500 million
- Total inflation of approximately 2.5%
- Effective tax rate of 10% to 11%
- Diluted net earnings per share from continuing operations of $6.30 to $6.45 including:
- Approximately $0.15 related to the addition of the 53rd week
- Approximately -$0.05 related to the implementation of ASC-842 Lease Accounting
- Approximately 124 million weighted average diluted shares outstanding
Darden Restaurants (NYSE:DRI) stock price history
The image below, obtained from Google, shows the stock price history of Darden Restaurants (NYSE: DRI) over the last 5 years. And it has been a very good time for Darden Restaurant stockholders. 5 years ago the stock of Darden was trading around $46.59 and its currently trading at $120.68. Thats a whopping 159% return over the last 5 years. The stock is also trading at a lot closer to its 52 week high (infact its trading very close to its 52 week high) than it is to its 52 week low, which to us is a clear indication that the short term momentum and sentiment towards Darden is very positive.
Recent coverage of Darden Restaurants
Darden Restaurants (NYSE: DRI) latest stock valuation
So based on the earnings report of Darden Restaurants (NYSE:DRI) and the latest earnings guidance provided what do we value Darden Restaurants (DRI) stock at? Based on the earnings reported by the group our valuation model provides a target (full value) price for Darden Restaurants at $106.10 a stock. We therefore believe the stock of Darden Restaurants is overvalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $106.10 Therefore we believe the stock is a good buy below $95.50.
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $106.10 Therefore we believe the stock is a good buy below $95.50.