|
Related Topics
|
Category: Stock Market and Darden Restaurants (DRI)
Date: 28 September 2020 Stock Price of Darden (DRI): $97.17 We take a look at the 1st quarter earnings release of their 2021 fiscal year of Darden Restaurants one of America's leading restaurant groups in the full-service dining space with brands such as Olive Garden and Longhorn Steakhouse. The group's sales declined by -21% for the quarter compared to the same quarter of the previous year and they reported net earnings of $36.1 million for the 1st quarter of their 2021 fiscal year.
|
- The actions we continued to take in response to COVID-19, which include being laser-focused on execution and strengthening our business model, resulted in significantly improved first quarter performance that exceeded expectations - Gene Lee "
About Darden Restaurants (DRI)
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. Some of Darden Restaurants brands include:
The image below shows Darden Restaurants different brands
- Olive Garden
- Longhorn Steakhouse
- Cheddar's Scratch Kitchen
- Yard House
- Bahama Breeze
The image below shows Darden Restaurants different brands
Overview of Darden Restaurants' 1st quarter 2021 earnings report
The numbers we are interested in (for the quarter):
- Sales: $1.527 billion (down from $2.133 billion from the same quarter of the previous year)
- Sales decreased by -21% over the last 12 months
- Total Operating Costs: $1.478 billion (down from $1.932 billion for the same quarter of the previous year)
- Operating costs decreased by -23.4% over the last 12 months
- Net earnings: $36.1million (down from $170.6 million for the same quarter of the previous year)
- Diluted loss per share: $0.28 (down from $1.39 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 130.9 million (up from 124.6 million for the same quarter of the previous year)
- Cash and cash equivalents: $654.6 million
- Cash and cash equivalents per share: $1.27
- Cash and cash equivalents makes up 5% of Darden Restaurants' market capital
- Cash and cash equivalents makes up 6.7% of Darden Restaurants' total assets
- Inventories: $190.1 million
- Inventories makes up 1.9% of Darden Restaurants' total assets
- Stockholders equity in Darden Restaurants: $2.375 billion
- Stockholders equity per share: $18.14
- Darden restaurants is trading at 5.4 times its stockholders equity per share which is within the expected range of between 2 and 4 times that most firms tend to trade at.
- The average price to book value of firms in the S&P 500 is 3.7
Darden Restaurants' management commentary on their 4th quarter 2020 earnings guidance
ORLANDO, Fla., Sept. 24, 2020 /PRNewswire/ -- Darden Restaurants, Inc., (NYSE:DRI) today reported its financial results for the first quarter ended August 30, 2020.
First Quarter 2021 Financial Highlights, Comparisons to First Quarter Last Year
"The actions we continued to take in response to COVID-19, which include being laser-focused on execution and strengthening our business model, resulted in significantly improved first quarter performance that exceeded expectations," said CEO Gene Lee. "I'm incredibly proud of how our restaurant teams have adapted to our new operating environment and their ongoing dedication to safety and delivering exceptional guest experiences."
First Quarter 2021 Financial Highlights, Comparisons to First Quarter Last Year
- Total sales of $1.53 billion, a decrease of 28.4% driven by negative blended same-restaurant sales of 29.0% and partially offset by the addition of 14 net new restaurants
- Same-restaurant sales by segment:
- (28.2)% for Olive Garden
- (39.1)% for Fine Dining
- (18.1)% for LongHorn Steakhouse
- (39.0)% for Other Business
- Reported diluted net earnings per share from continuing operations of $0.28 as compared to last year's reported diluted net earnings per share of $1.38
- Adjusted diluted net earnings per share from continuing operations of $0.56, after excluding $0.28 related to corporate restructuring costs, as compared to reported diluted net earnings per share of $1.38*
- Reported net earnings from continuing operations of $37 million
- Adjusted EBITDA of $185 million*
"The actions we continued to take in response to COVID-19, which include being laser-focused on execution and strengthening our business model, resulted in significantly improved first quarter performance that exceeded expectations," said CEO Gene Lee. "I'm incredibly proud of how our restaurant teams have adapted to our new operating environment and their ongoing dedication to safety and delivering exceptional guest experiences."
Term Loan Repayment and Other Liquidity Matters
Given steadily improving cash flows in the quarter, and increased confidence in cash flow projections, the Company fully repaid its $270 million term loan on August 10, 2020. The Company now has access to $1.4 billion of liquidity with $655 million of cash on hand and $750 million available through its credit facility.
Dividend Declared
Darden's Board of Directors announced that it has reinstated a quarterly dividend and declared a quarterly cash dividend of $0.30 per share on the Company's outstanding common stock. The dividend is payable on November 2, 2020 to shareholders of record at the close of business on October 9, 2020.
Fiscal 2021 Second Quarter Financial Outlook
The Company provided the financial outlook for the second quarter of fiscal 2021 as follows:
The Company reiterated its full year outlook for 35-40 net new restaurants and total capital spending of $250 to $300 million.
Given steadily improving cash flows in the quarter, and increased confidence in cash flow projections, the Company fully repaid its $270 million term loan on August 10, 2020. The Company now has access to $1.4 billion of liquidity with $655 million of cash on hand and $750 million available through its credit facility.
Dividend Declared
Darden's Board of Directors announced that it has reinstated a quarterly dividend and declared a quarterly cash dividend of $0.30 per share on the Company's outstanding common stock. The dividend is payable on November 2, 2020 to shareholders of record at the close of business on October 9, 2020.
Fiscal 2021 Second Quarter Financial Outlook
The Company provided the financial outlook for the second quarter of fiscal 2021 as follows:
- Total sales of approximately 82% of prior year
- EBITDA of $200 to $215 million*
- Diluted net earnings per share from continuing operations of $0.65 to $0.75
- Approximately 131 million weighted average diluted shares outstanding
The Company reiterated its full year outlook for 35-40 net new restaurants and total capital spending of $250 to $300 million.
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 $62 and its currently trading at $97.17. Thats 56.8% returned to Darden Restaurant stockholders over the last 5 years.
The stock of Darden is trading at a lot closer to its 52 week high than it is to the 52 week low, which to us is a clear indication that the short term sentiment and momentum of Darden (DRI) stock is positive at this point in time
The stock of Darden is trading at a lot closer to its 52 week high than it is to the 52 week low, which to us is a clear indication that the short term sentiment and momentum of Darden (DRI) stock is positive at this point in time
Darden (DRI) stock vs Cracker Barrel (CBRL) stock over the last 5 years
The image below shows the stock price performance of Darden (DRI) and Cracker Barrel (CBRL) over the last 5 years. While both these firms are active in the sit down dining industry their stock price trends and returns are very different. The summary below shows the returns of Darden (DRI) and Cracker Barrel (CBRL) over the last 5 years:
Darden has easily outperformed the stock of Cracker Barrel over the last 5 years.
- Darden (DRI): 51.6%
- Cracker Barrel (CBRL): -16.7%
Darden has easily outperformed the stock of Cracker Barrel over the last 5 years.
Recent coverage of Darden Restaurants
The extract below covers the latest earnings report of Darden Restaurants as obtained from Fool.com
What happened
Shares of Darden Restaurants (NYSE:DRI) were climbing today after the Olive Garden parent beat bottom-line estimates in its first-quarter earnings report, offered promising guidance for the current quarter, and reinstated its dividend, all signs the company was rebounding from the depths of the coronavirus crisis. As a result, the stock was up 8.7% as of 3:21 p.m. EDT.
So what
Darden continues to struggle during the pandemic as comparable sales in the quarter were down 29%, driving a revenue decline of 28.4% to $1.53 billion, which missed estimates at $1.56 billion. Despite pandemic-related headwinds, the restaurant chain still managed to deliver a profit for the quarter, reporting adjusted earnings per share of $0.56, which excludes $0.28 per share of restructuring costs. That was down substantially from the $1.38 in EPS it reported in the year-ago quarter, but easily beat analyst expectations of just $0.05. It also repaid a $270 million term loan on Aug. 10, showing its balance sheet and liquidity are improving.
LongHorn Steakhouse was the company's top-performing chain in the quarter as comparable sales there declined 18.1% in the quarter, compared to a 28.2% slide at Olive Garden. Management also noted that only 68% of its restaurants had at least limited dining room capacity at the start of the first quarter, compared to 91% at the start of the second quarter, favoring the company's continuing recovery. CEO Gene Lee said in a statement, "The actions we continued to take in response to COVID-19, which include being laser-focused on execution and strengthening our business model, resulted in significantly improved first quarter performance that exceeded expectations."
Read the full article here
What happened
Shares of Darden Restaurants (NYSE:DRI) were climbing today after the Olive Garden parent beat bottom-line estimates in its first-quarter earnings report, offered promising guidance for the current quarter, and reinstated its dividend, all signs the company was rebounding from the depths of the coronavirus crisis. As a result, the stock was up 8.7% as of 3:21 p.m. EDT.
So what
Darden continues to struggle during the pandemic as comparable sales in the quarter were down 29%, driving a revenue decline of 28.4% to $1.53 billion, which missed estimates at $1.56 billion. Despite pandemic-related headwinds, the restaurant chain still managed to deliver a profit for the quarter, reporting adjusted earnings per share of $0.56, which excludes $0.28 per share of restructuring costs. That was down substantially from the $1.38 in EPS it reported in the year-ago quarter, but easily beat analyst expectations of just $0.05. It also repaid a $270 million term loan on Aug. 10, showing its balance sheet and liquidity are improving.
LongHorn Steakhouse was the company's top-performing chain in the quarter as comparable sales there declined 18.1% in the quarter, compared to a 28.2% slide at Olive Garden. Management also noted that only 68% of its restaurants had at least limited dining room capacity at the start of the first quarter, compared to 91% at the start of the second quarter, favoring the company's continuing recovery. CEO Gene Lee said in a statement, "The actions we continued to take in response to COVID-19, which include being laser-focused on execution and strengthening our business model, resulted in significantly improved first quarter performance that exceeded expectations."
Read the full article here
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 $84.20 a stock (up slightly from our last earnings report valuation of Darden). 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 $84.20 Therefore we believe a good entry point into the stock would be at $75.80 or below
We expect that the stock of Darden to pull back slightly from its current price to levels closer to our target price in coming weeks and months
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 $84.20 Therefore we believe a good entry point into the stock would be at $75.80 or below
We expect that the stock of Darden to pull back slightly from its current price to levels closer to our target price in coming weeks and months
Next earnings release of Darden Restaurants
It is expected that Darden Restaurants will release their 2nd quarter 2021 earnings report in late December 2020