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Darden Restaurants: the restaurateur will feed everyone

Darden Restaurants: the restaurateur will feed everyone

21 December 2022

Darden Restaurants, an American restaurateur, reported on the results of the second quarter of fiscal year 2023. The results are interesting:

  • earnings per share amounted to $1.52 (+2.7% YoY), better than expected;
  • net profit decreased to $187.2 million;
  • revenue increased to $2.49 billion (+9.4% YoY), better than forecasts.

The strength of the report was the company’s improvement in the forecast range for EPS for the 2023 fiscal year. Now expectations assume $7.50-8.00 per share versus $7.40-8.00 per share. The company also expects to increase sales parameters.

Darden Restaurants manages to balance and maintain stability, although the external background for it is deteriorating. It is known that the main item of expenditure for any restaurant is food. Darden Restaurants estimates that the cost of products and components increased by 18% year-on-year. This is a lot, but the company transfers only part of food inflation to visitors. Because of this, local pressure is created on margin indicators.

Support is provided by the share buy-back program. Darden Restaurants has to buy back $ 811 million worth of securities with a yield of 4.6%.

Darden Restaurants continues to open establishments and improve the parameters of comparable sales. If we bet that inflation in the United States has reached its peak values and then its slowdown will follow, operating profitability will “revive”, although there is nothing critical in it now.

The consensus forecast for the stock for 6 months is $145.

The MACD indicator on the daily chart is falling into a negative zone and signals sales, which is quite logical after the rise earlier. The Stochastic oscillator is growing in a positive area and signals purchases.

21 December 2022
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