Darden Restaurants stock under pressure despite upbeat quarterly results

5:35 PM June 23, 2022

Darden Restaurants (DRI.US) stock erased premarket gains and is currently trading nearly 2.0% lower despite the company posted upbeat  figures for the fourth quarter as sales improved, mainly thanks to the return of its fine-dining business.

  • The owner of Olive Garden and other restaurant chains earned $2.24 a share, topping analysts’ estimates of $2.21 a share. Revenue of $2.6 billion also came in above Wall Street estimates of $2.54 billion. 
  • For the current fiscal year, the company expects diluted net earnings per share in the region of $7.40 to $8, compared to the consensus EPS estimate of $8.15, however sales growth in same-restaurant may fall from 11.7% to 6%. 
  • Darden issued a revenue outlook of $10.20 billion-$10.40 billion, compared to market projections of $10.22 billion.
  • Company increased its quarterly dividend by 10% and authorized a new $1 billion share repurchase program. 
  • “By adhering to our strategy, and pricing below inflation, we ended the year with significantly better margins than pre-COVID,” said Darden CFO Raj Vennam.
  • Several analysts believe that company sales may increase in the future, however margins may take a huge hit due to surging inflation and slowing customer demand.

Darden Restaurants (DRI.US) stock has been trading in a downtrend in recent months, however price found support around $111.30 level which coincides with lower limit of the triangle structure and 38.2% Fibonacci retracement of the upward wave launched in March 2020. As long as price sits above this level, another upward impulse may be launched. Source: xStation5

Start investing today or test a free demo

Open real account TRY DEMO Download mobile app Download mobile app

Forex and CFDs are leveraged products and can result in losses that exceed your deposits. Please ensure you fully understand all of the risks.

Losses can exceed deposits