Market Overview

PreMarket Prep Stock Of The Day: Darden Restaurants

PreMarket Prep Stock Of The Day: Darden Restaurants

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

The dash for trash that began in earnest for several issues Friday is continuing in Tuesday's session.

Some of the stocks that have been hit the hardest by the COVID-19 pandemic are staging a comeback. One of the issues that is partaking in the rally is Darden Restaurants, Inc. (NYSE: DRI), making it the PreMarket Prep Stock of the day.

About Darden Restaurants 

Darden is the world's largest full-service restaurant company. Its brands include high-end establishments such as Eddie V’s Prime Seafood and The Capital Grille, as well as six casual restaurant chains such as Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, Yard House and Cheddar’s Scratch Kitchen,

An Obvious Reason For Darden's Downfall

With a vast majority of the world’s population not leaving their homes, let alone going out to restaurants, the issues in the sector have been pummeled. Despite many restaurants being closed altogether, their rent is still due.

As many restaurant owners can attest to, if and when the crisis subsidies and things return to normal, it will take some time to ramp up operations to pre-crisis levels. 

More importantly, with social distancing becoming the wave of the future, establishments will have to limit capacity to accommodate the new normal.

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Darden Price Action Since September

The issue made its all-time high last September at $128.14. It reached $124.01 in February, but ended the month at $97.50. In March, it shed 73%  of its value when bottomed at $26.15, which marked a 10-year low.

Darden staged a huge rebound to $67.72 on March 25, but is still trading below that level despite a 14.13% gain to $59.87 at the time of publication Tuesday. 

Darden Moving Forward

Several restaurant companies are firmly in the green Tuesday, instigated by positive market sentiment and optimism of at least a slowdown in the crisis.

Investors might be expecting a faster reopening of stores and restaurants than before. 

Yet future expectations for the issue may need to need to be lowered for a few reasons. First of all, with unemployment most likely to continue to climb, the unemployed are less likely to dine out, especially at higher-end restaurants.

And others who have become more accustomed to cooking at home during the crisis will undoubtedly recognize the associated cost savings.


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