Darden Restaurants, Inc. (NYSE:DRI) Receives Average Recommendation of "Moderate Buy" from Brokerages

Key Points

• Analysts remain broadly positive: Twenty-seven firms give Darden Restaurants a consensus “Moderate Buy” rating, with 18 buys and nine holds. The average 12-month price target is approximately $231.87.
• Darden’s latest quarter showed an earnings beat, with EPS of $3.66 versus the $3.63 consensus, while revenue rose 13.7% year over year to $3.72 billion. Analysts expect about $11.25 in EPS for the current fiscal year.
• The quarterly dividend increased to $1.62 per share, representing a 3.1% annualized yield. However, company insiders sold roughly 70,185 shares worth $14.6 million during the past quarter.

Darden Restaurants, Inc. (NYSE:DRI - Get Free Report) has been given an average rating of "Moderate Buy" by the twenty-seven research firms that are presently covering the company, MarketBeat.com reports. Nine analysts have rated the stock with a hold rating and eighteen have assigned a buy rating to the company. The average twelve-month price objective among analysts that have issued a report on the stock in the last year is $231.8696.

Several research firms have weighed in on DRI. BMO Capital Markets reissued a "market perform" rating on shares of Darden Restaurants in a research report on Monday, June 22nd. KeyCorp boosted their price objective on shares of Darden Restaurants from $228.00 to $237.00 and gave the company an "overweight" rating in a report on Thursday, August 27th. UBS Group reissued a "buy" rating on shares of Darden Restaurants in a research report on Friday, September 11th. Argus raised their target price on Darden Restaurants from $240.00 to $245.00 and gave the stock a "buy" rating in a research note on Tuesday, June 30th. Finally, Seaport Research Partners started coverage on Darden Restaurants in a research report on Wednesday. They set a "buy" rating and a $240.00 price target for the company.

Darden Restaurants Stock Performance

Shares of DRI stock opened at $206.74 on Friday. The firm has a market cap of $23.58 billion, a price-to-earnings ratio of 19.92, a PEG ratio of 1.96 and a beta of 0.60. Darden Restaurants has a 52-week low of $169.00 and a 52-week high of $229.76. The company has a quick ratio of 0.21, a current ratio of 0.31 and a debt-to-equity ratio of 0.74. The company's 50 day moving average is $210.80 and its 200 day moving average is $204.61.

Darden Restaurants (NYSE:DRI - Get Free Report) last announced its earnings results on Thursday, June 25th. The restaurant operator reported $3.66 EPS for the quarter, topping analysts' consensus estimates of $3.63 by $0.03. The business had revenue of $3.72 billion during the quarter, compared to the consensus estimate of $3.73 billion. Darden Restaurants had a net margin of 9.13% and a return on equity of 57.44%. The firm's revenue was up 13.7% on a year-over-year basis. During the same period in the previous year, the company posted $2.98 earnings per share. Darden Restaurants has set its FY 2027 guidance at 11.100-11.350 EPS. On average, sell-side analysts anticipate that Darden Restaurants will post 11.25 EPS for the current fiscal year.

Darden Restaurants Increases Dividend

The firm also recently announced a quarterly dividend, which was paid on Monday, August 3rd. Investors of record on Friday, July 10th were issued a dividend of $1.62 per share. This represents a $6.48 annualized dividend and a dividend yield of 3.1%. This is a boost from Darden Restaurants's previous quarterly dividend of $1.50. The ex-dividend date of this dividend was Friday, July 10th. Darden Restaurants's dividend payout ratio is 62.43%.

Insiders Place Their Bets

In other news, insider John W. Wilkerson sold 8,864 shares of the stock in a transaction dated Wednesday, August 5th. The shares were sold at an average price of $208.33, for a total transaction of $1,846,637.12. Following the sale, the insider directly owned 18,794 shares of the company's stock, valued at $3,915,354.02. This represents a 32.05% decrease in their position. The transaction was disclosed in a legal filing with the SEC, which is available through this link. Also, CFO Rajesh Vennam sold 8,478 shares of the firm's stock in a transaction that occurred on Wednesday, July 29th. The shares were sold at an average price of $210.00, for a total value of $1,780,380.00. Following the completion of the sale, the chief financial officer directly owned 8,569 shares in the company, valued at approximately $1,799,490. The trade was a 49.73% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Over the last quarter, insiders have sold 70,185 shares of company stock worth $14,636,984. 0.67% of the stock is currently owned by company insiders.

Institutional Investors Weigh In On Darden Restaurants

A number of institutional investors and hedge funds have recently made changes to their positions in the stock. Bell Investment Advisors Inc purchased a new stake in Darden Restaurants during the 2nd quarter worth about $28,000. Union Savings Bank purchased a new position in shares of Darden Restaurants during the 4th quarter worth approximately $28,000. BOK Financial Private Wealth Inc. purchased a new position in shares of Darden Restaurants during the fourth quarter valued at approximately $29,000. Transamerica Financial Advisors LLC purchased a new position in shares of Darden Restaurants during the 2nd quarter worth about $34,000. Finally, HHM Wealth Advisors LLC boosted its holdings in Darden Restaurants by 44.8% in the first quarter. HHM Wealth Advisors LLC now owns 181 shares of the restaurant operator's stock valued at $35,000 after acquiring an additional 56 shares during the last quarter. 93.64% of the stock is owned by hedge funds and other institutional investors.

Key Stories Impacting Darden Restaurants

Here are the key news stories impacting Darden Restaurants this week:

• Positive Sentiment: Analysts remain constructive. Oppenheimer and Morgan Stanley analysts reportedly expect DRI’s stock price to rise, while Seaport Global initiated coverage with a Buy rating. The new coverage adds support to the bullish case for the restaurant operator. Oppenheimer analyst outlook Morgan Stanley analyst outlook Seaport Global Buy rating
• Positive Sentiment: Wall Street expects earnings growth. Darden is expected to report quarterly earnings next week, with investors looking for continued sales and profit growth. The company’s most recent reported quarter delivered an earnings beat and double-digit year-over-year revenue growth, providing a constructive baseline ahead of the release. Darden quarterly earnings preview
• Neutral Sentiment: Options markets imply elevated volatility. Options traders are pricing in an approximately 8% potential move after the earnings announcement. This signals that a meaningful reaction is expected, but it does not indicate whether the move will be higher or lower. Options market earnings outlook
• Negative Sentiment: Earnings-beat expectations are cautious. Zacks says DRI does not currently have the typical combination of factors associated with a likely earnings beat. That caution, combined with the recent 4.3% slide, may be weighing on sentiment ahead of the report. Zacks earnings expectations

About Darden Restaurants

Darden Restaurants, Inc NYSE: DRI is a full-service restaurant company headquartered in Orlando, Florida. It operates and franchises a portfolio of dining brands serving a range of cuisines, price points and occasions, with restaurants primarily located in the United States and select international markets.

Its restaurant portfolio includes Olive Garden, an Italian-American dining chain; LongHorn Steakhouse; Cheddar's Scratch Kitchen; Yard House; The Capital Grille; Seasons 52; Bahama Breeze; Eddie V's; Ruth's Chris Steak House; and Chuy's.

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