Zacks Investment Research Lowers Darden Restaurants, Inc. (DRI) to Sell

Darden Restaurants, Inc. (NYSE:DRI) was downgraded by Zacks Investment Research from a “hold” rating to a “sell” rating in a research report issued to clients and investors on Tuesday, October 17th.

According to Zacks, “Darden posted solid first-quarter fiscal 2018 results with the bottom and the top line surpassing the Zacks Consensus Estimate. In fact, the reported quarter marked the 12th successive earnings beat for the company. Going forward, various sales initiatives and technology-driven moves are expected to boost the top line. Additionally, efforts to attract guests at Olive Garden, LongHorn and other units, along with the cost saving measures are encouraging. However, Darden’s shares underperformed its industry in the past six months. A soft consumer spending environment might keep comps under pressure, while rising labor costs and a non-franchised business model are likely to dampen the company’s profits, moving ahead.”

Several other research firms have also recently weighed in on DRI. J P Morgan Chase & Co restated a “neutral” rating and set a $93.00 target price (up previously from $82.00) on shares of Darden Restaurants in a research note on Wednesday, June 28th. Credit Suisse Group cut their price target on Darden Restaurants from $85.00 to $82.00 and set a “neutral” rating on the stock in a research report on Wednesday, September 27th. BMO Capital Markets lifted their price target on Darden Restaurants from $85.00 to $87.00 and gave the stock a “market perform” rating in a research report on Friday, June 30th. Stifel Nicolaus assumed coverage on Darden Restaurants in a research report on Monday, October 2nd. They set a “buy” rating and a $92.00 price target on the stock. Finally, Morgan Stanley reaffirmed an “equal weight” rating and set a $86.00 price target (up previously from $83.00) on shares of Darden Restaurants in a research report on Thursday, June 22nd. Two analysts have rated the stock with a sell rating, sixteen have assigned a hold rating and nine have issued a buy rating to the company. The company currently has a consensus rating of “Hold” and a consensus target price of $87.59.

Darden Restaurants (NYSE DRI) traded up 0.65% on Tuesday, reaching $83.33. 1,585,852 shares of the company’s stock were exchanged. Darden Restaurants has a 52-week low of $61.29 and a 52-week high of $95.22. The firm’s 50 day moving average price is $80.90 and its 200 day moving average price is $85.24. The company has a market cap of $10.31 billion, a PE ratio of 21.58 and a beta of 0.24.

Darden Restaurants (NYSE:DRI) last issued its quarterly earnings data on Tuesday, September 26th. The restaurant operator reported $0.99 earnings per share (EPS) for the quarter, hitting analysts’ consensus estimates of $0.99. Darden Restaurants had a return on equity of 26.06% and a net margin of 6.60%. The firm had revenue of $1.94 billion during the quarter, compared to the consensus estimate of $1.93 billion. During the same period last year, the company earned $0.88 EPS. The company’s quarterly revenue was up 12.9% on a year-over-year basis. On average, analysts expect that Darden Restaurants will post $4.44 earnings per share for the current year.

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A number of institutional investors have recently added to or reduced their stakes in DRI. BlackRock Inc. increased its stake in Darden Restaurants by 4,601.4% in the first quarter. BlackRock Inc. now owns 11,464,253 shares of the restaurant operator’s stock valued at $959,215,000 after purchasing an additional 11,220,403 shares during the last quarter. Janus Henderson Group PLC increased its stake in Darden Restaurants by 3,640.4% in the second quarter. Janus Henderson Group PLC now owns 737,685 shares of the restaurant operator’s stock valued at $66,717,000 after purchasing an additional 717,963 shares during the last quarter. APG Asset Management N.V. increased its stake in Darden Restaurants by 34.4% in the third quarter. APG Asset Management N.V. now owns 2,361,712 shares of the restaurant operator’s stock valued at $186,056,000 after purchasing an additional 604,364 shares during the last quarter. Robeco Institutional Asset Management B.V. increased its stake in Darden Restaurants by 66.8% in the second quarter. Robeco Institutional Asset Management B.V. now owns 1,275,399 shares of the restaurant operator’s stock valued at $115,348,000 after purchasing an additional 510,969 shares during the last quarter. Finally, Balyasny Asset Management LLC increased its stake in Darden Restaurants by 281.8% in the second quarter. Balyasny Asset Management LLC now owns 181,814 shares of the restaurant operator’s stock valued at $16,443,000 after purchasing an additional 281,814 shares during the last quarter. Hedge funds and other institutional investors own 89.59% of the company’s stock.

About Darden Restaurants

Darden Restaurants, Inc is a full-service restaurant company. The Company owned and operated 1,536 restaurants through its subsidiaries in the United States and Canada, as of May 29, 2016. The Company’s segments include Olive Garden, LongHorn Steakhouse, Fine Dining (which includes The Capital Grille, and Eddie V’s Prime Seafood and Wildfish Seafood Grille (Eddie V’s)) and Other Business (which includes Yard House, Seasons 52, Bahama Breeze, consumer-packaged goods and franchise revenues).

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