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.

Of all the issues that rebounded off last March's low and made a new all-time high, one of the most remarkable ones just may be Darden Restaurants Inc. DRI.

The Company: Darden is one of the largest players in the $185 billion U.S. casual dining industry. Olive Garden, LongHorn Steakhouse and Cheddar's Scratch Kitchen are its core brands. In November 2015, the company spun off selected real estate and restaurant assets into Four Corners Property Trust.

Drop And Pop: After ending 2020 at $109.01, Darden Restaurants went on to make a new all-time high in February at $124.01. It backed off that high along with the rest of the market to end the month at $97.50.

It cratered along with the broad market in March falling all the way to $26.15. That low came in just under its October 2009 low ($27.12). By the end of 2020, it was back within striking distance of its all-time high at $119.12.

Slow Start To 2021 And Then More Of Same: While the broad market continued higher in January, Darden had a mild retreat. In some flip-flop price action, the issue declined on Jan. 27 from $118.50 to $112.10 but immediately bounced back the next day to $118.78. It ended the month slightly in the red ($116.89 vs. $119.12).

It bottomed on the first day of February at $117.30 and rallied to a new all-time high in only four days, peaking at $133.33. It went on to make new highs and ended the month at $137.33.

On March 15, it posted its all-time high ($147.93) and all-time closing high ($146.24). Profit-taking ahead of its earnings report nudged to $133.93 in Wednesday’s session.

Q3 Report: Before the open, Darden announced earnings of 98 cents per share, well ahead of the 69-cent consensus estimate, along with a sales $1.73 billion versus $1.63 billion estimates. The company raised EPS guidance to $1.60-$1.70 versus the $1.24 estimate and sales to $2.1 billion versus $1.95 billion estimates. The company announced a $500 million buyback.

Price Action: After a higher open, it sharply reversed course but found support just above Wednesday’s low ($133.73) and close ($133.93), only reading $134.19 and turned higher. As of 1:50 p.m. EST, it rallied to make a new high for the day ($145.64) but has retreated from it.

That high coincides with its March 12 high ($145.83). It would need to end the session above $146.24 in order to post a new all-time closing high.