Argus: Darden Restaurants Among 'Best-Managed' Dining Names

Darden Restaurants, Inc. DRI beat consensus estimates Dec. 19 with its second-quarter EPS of 73 cents and sales of $1.88 billion.

The Analyst

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.

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. 

Related Links: 

Baird: The Potential Restaurant Winners From A New Tax Bill 

Are Restaurants Safe From The Amazon Effect? 

Posted In: ArgusdiningJohn StaszakrestaurantsAnalyst ColorUpgradesPrice TargetRestaurantsAnalyst RatingsGeneral

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.