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The company brought out some substantial surprises, despite multiple headwinds currently working against the entire restaurant industry.
The sheer resiliency of Darden’s operation makes it attractive by itself. Throw in the versatility of its various chain members, and that only serves to make me more bullish on Darden overall.
Darden’s 2021 results have meant a steady increase in share prices. The overall trajectory has a nicely upward-sloped angle, even if some losses emerged. Darden stock closed at $116.24 on January 4. Today it’s worth $158.74 per share, showing a clear momentum. (See Darden stock charts on TipRanks)
Darden’s latest earnings report, meanwhile, demonstrates its remarkable resiliency. The company still posted $1.76 per share in earnings. Wall Street forecasts, meanwhile, called for just $1.64 in earnings, giving Darden a noticeable beat. Revenue also came in solidly. The company posted $232 million in earnings from continuing operations.
Analyst expectations took a beating on same-store sales projections as well. Darden posted an increase in same-store sales of 47.5%, with total sales up 51%. Darden added a net increase of 34 total restaurants across its various brands. This prompted a slightly higher gain in sales overall as compared to same-store sales.
Perhaps best of all for investors, the company’s stock buyback program is continuing. The company has already repurchased around $186 million in outstanding common stock. It plans to repurchase another $750 million worth of shares.
Wall Street’s Take
TipRanks’ analyst rating consensus calls Darden a Moderate Buy, based on 15 Buys, and five Holds. The average DRI price target of $171.29 implies 7.9% upside potential.
Tasty Set of Results
Darden’s results are like a greasy spoon’s menu. The atmosphere is awful, but you can’t beat the food.
The market conditions for restaurants have been a disaster for weeks, if not months. Places finally opened back up to visitors, but then what happens? Labor shortages kick in. Supply chain problems make it tough to get certain foods at certain times. Trying to explain to customers why their favorite dish is suddenly unavailable despite it being available for years cannot be easy, or fun to do.
Yet, despite all this, Darden is posting major wins. Granted, using 2020 figures as a comparison will color the figures a bit.
It’s hard not to post gains in same-store sales when several of your stores were closed by government order.
Darden’s numbers here, though, are more than just people coming back to restaurant tables; they’re also a reflection of Darden’s overall operations.
Concluding Views
Darden’s versatility is a big help here. Looking at the sheer scope of Darden’s operations makes it clear it’s got a menu — and a restaurant — for almost every taste.
Most people think of Olive Garden when they think Darden, and with good reason; it’s perhaps the most widespread of its operations. But it’s also home to upscale options like The Capital Grille and Eddie V’s Prime Seafood.
Darden can offer a range of options for a range of tastes and pocketbooks. That makes it particularly resistant to recessions; people will want a nice dinner out every so often regardless of their economic condition. Throw in an aggressive stock buyback program, and that should make Darden especially attractive to investors.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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