DRI Earnings: Darden Restaurants Plunges on Scaled-Back Outlook
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DRI Earnings: Darden Restaurants Plunges on Scaled-Back Outlook

Story Highlights

Darden shares are sliding today after the company scaled back its financial outlook. The restaurant operator has announced a new stock buyback program of up to $1 billion.

Darden Restaurants (NYSE:DRI) shares plunged by over 4% in the early session today after the restaurant chain scaled back its financial expectations for the full fiscal year. In Q3, Darden’s top line increased by 6.8% year-over-year to $3 billion. However, the figure missed analysts’ expectations by $20 million. EPS of $2.62 came in line with estimates.

The growth in Darden’s top line was primarily driven by the addition of 79 Ruth’s Chris Steak House outlets and 53 other net new locations. Its consolidated same-restaurant sales during this period declined by 1% owing to weakness in the Olive Garden and Fine Dining verticals.

Muted Outlook

Furthermore, Darden has scaled back its financial outlook for Fiscal Year 2024. For the full year, the company expects total sales of $11.4 billion compared to the previous outlook of $11.5 billion. Similarly, same-restaurant sales growth is seen hovering between 1.5% and 2% versus the prior estimated range of 2.5% to 3%. Adjusted EPS for the year is foreseen in the range of $8.80 to $8.90.

Focus on Shareholder Value

Separately, Darden has declared a quarterly cash dividend of $1.31 per share. The DRI dividend is payable on May 1 to investors of record on April 10. Moreover, Darden has announced a new share buyback program of up to $1 billion. Despite these efforts to drive shareholder value, Darden’s lowered financial expectations are heavily weighing on investor sentiment in the stock today.

Is DRI a Good Stock to Buy?

Today’s price decline follows a nearly 22% jump in Darden’s share price over the past six months. Overall, the Street has a Strong Buy consensus rating on Darden alongside an average DRI price target of $183.76. However, analysts’ views on the stock could see a revision following today’s earnings report.

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