Darden Restaurants ‘profitably grew market share’ in its fiscal Q2

Written by

Written on Dec 15, 2023

Reading time 2 minutes

Darden says its revenue came in marginally shy of estimates in Q2.
Restaurant operator announced $1.31 a share of quarterly cash dividend.
Darden Restaurants stock is currently up about 20% since mid-October.

Darden Restaurants Inc (NYSE: DRI) says its revenue came in marginally shy of Street estimates in the second quarter. Its shares are down 2.0% at writing.

Darden raises guidance for fiscal 2024

On the plus side, the restaurant operator raised its earnings outlook for the full year to $8.75 to $8.90 on a per-share basis.

Darden Restaurants now expects $11.5 billion in sales in its fiscal 2024. Rick Cardenas – its Chief Executive said in a press release today:

We continued to profitably grow market share gain this quarter as we outperformed industry same-restaurants sales and traffic.

Analysts, in comparison, were at $8.82 a share on $11.6 billion in sales. Darden stock has gained roughly 20% over the past two months.

This #HungerActionMonth, we’re continuing our fight against hunger by adding 10 more refrigerated trucks at 10 @FeedingAmerica food banks. Since 2021, we've partnered with @PenskeNews & @OneLineage to provide 35 trucks to food banks to deliver food where it’s needed most. pic.twitter.com/mlzKDMRwde
— Darden Restaurants (@darden) September 14, 2023

Darden Restaurants Q2 financial highlights

Earned $212.1 million versus the year-ago $187.2 million
Per-share earnings also improved from $1.52 to $1.76
Adjusted EPS printed at $1.84 as per the press release
Sales went up 9.7% year-over-year to $2.73 billion
Consensus was $1.74 a share on $2.74 billion in sales

The food company also announced $1.31 a share of quarterly cash dividend on Friday. CEO Cardenas added:

We remain focused on managing our business for long term and driving strong operating fundamentals. Holidays are the busiest time of year for our restaurant teams.

What else was noteworthy in the earnings report?

Darden Restaurants saw comparable sales at Olive Garden pop 4.1% in its recently concluded quarter while LongHorn Steakhouse gained 4.9%.

The aforementioned positives were partially offset by a 1.7% decline in fine dining sales, as per the earnings report.

Earlier this year, the New York listed firm acquired Ruth’s Hospitality Group for $715 million as Invezz reported here.

Eric Gonzalez – a KeyBanc analyst reiterated his “overweight” rating on $DRI this week and raised his price objective to $177 which suggests about a 10% upside from here.