Bloomin' Brands vs. Darden Restaurants - Which Would You Rather Invest In?

Between restaurant brand powerhouses Bloomin’ Brands BLMN and Darden Restaurants DRI can be found some of the most ubiquitous restaurant chains in the United States.

Bloomin’ is home to such notable dining establishments as its flagship Outback Steakhouse brand, the upscale steak purveyors at Fleming’s, and the Italian food chefs at Carrabba’s. Darden counts Red Lobster, Longhorn Steakhouse and the Olive Garden among its stable of food houses.

Let's take a look at how these two companies stack up

Bloomin’ Brands launched its IPO in April 2012 at $11 per share. By January 1, 2013, the company was trading at $16.00 per share – not bad for its first nine months as a publicly traded company. Bloomin’ stock continued to shoot higher, and was trading over $20.00 per share by mid-April. The upward movement continued until mid-July, as the stock flirted with $27.00 per share, but then took a breather.

Bloomin’ traded in a general range of $22 to $26 for the rest of the year, and finished at $24.01. This must have been somewhat disappointing, considering the fact that the stock had been so hot through the first half of the year. But the 50 percent gain for 2013 is anything but unexceptional. 2014 Bloomin’ has continued its $22 - $26 trading range in 2014, meaning only those who are capitalizing off of volatility are making any money on the stock at the moment.

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Darden Restaurants opened 2013 trading at $45.68. This was after the stock suffered significant volatility at the end of 2012, which had seen the stock loose about $8 in share value between late-November 2012 and January 1, 2013. As the new year progressed, so did the fortunes of Darden stockholders, as the stock rose to a high of $55.25 in June. But all good things must come to an end.

Darden sold off heavily after its June high, and found itself trading in the low-$40s by early October. Perhaps unsurprisingly, the volatile Darden would once again climb out of the pits, this time to finish the year near its yearly highs at $54.37. The 19 percent yearly gain did not represent a particularly successful year compared to market averages, but volatility traders sure had plenty of opportunities to capitalize on the stock’s ups and downs. In fact, Darden’ s performance in 2014 is a microcosm of the stock’s performance over the past several quarters – up, down, back up...back down?

Where to go?

In a way, Bloomin’ Brands and Darden Restaurants mirror one another. Both restaurant brand companies have the requisite steakhouse, seafood and Italian offerings. But somehow Bloomin’ has the better offerings. That Bloomin’ Brands’ restaurants seem fresher and of higher quality could be considered a matter of opinion, but the fact that the company’s stock returns for 2013 were more than double those of Darden’s lend credence to the assertion.

Of course, there is more to stock returns than just counting popularity or customer visits. But when two companies – which offer products that more or less compete directly – have such widely varying returns, it signals that one is doing something far better than the other.