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Darden Restaurants, Inc. (NYSE:DRI) beat consensus estimates Dec. 19 with its second-quarter EPS of 73 cents and sales of $1.88 billion.
The Analyst
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Argus' John Staszak upgraded Darden Restaurants from Hold to Buy with a price target of $108.
The Thesis
Darden's initiatives to price aggressively, lower costs and increase customer traffic at Olive Garden can also be used to improve results at its specialty brands, Staszak said in a Thursday note. (See Staszak's track record here.)
And Olive Garden's operational efficiency, convenience, dining experience and technology improvements can be transferred to Darden's other brands, the analyst said. Argus expects that Darden's long history of dividend hikes and share buybacks will continue to attract growth-income investors.
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Buybacks, unit expansion and further cost reductions will lead to EPS growth over time, Staszak said. The analyst said he sees Darden as one of the best-managed casual dining companies.
In the Dec. 19 quarterly report, Darden increased its fiscal 2018 guidance from $4.38-$4.50 to $4.45-$4.53. Argus increased its fiscal 2018 EPS estimate from $4.44 to $4.60 and its fiscal 2019 EPS from $4.80 to $5.
The Price Action
Darden spiked 8.56 percent after the earnings report, reaching a 52-week high of $98.29. After reaching the 52-week high, it pulled back to $95.56 and is trading flat Thursday.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.