What Happened?
Shares of restaurant company Darden (NYSE:DRI) jumped 14.7% in the morning session after the company reported strong third-quarter results, which exceeded analysts' same-store sales expectations, leading to a revenue beat while EPS was roughly in line. The company recorded growth across its four largest brands–Olive Garden, LongHorn Steakhouse, Yard House, and Cheddar's Scratch Kitchen, demonstrating that the solid result was broad-based. Its full-year revenue guidance also came in slightly higher than Wall Street's estimates. Overall, this quarter had some key positives.
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What The Market Is Telling Us
Darden’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. Moves this big are rare for Darden and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 6.3% on the news that the company reported fourth-quarter results and lowered its full-year top line forecast, which is never a good sign. Same-store sales growth projection was lowered to a range of 1.5% to 2.0% (down from the previous guidance for growth of 2.5% to 3.0%). In addition, revenue and same-store sales missed expectations during the quarter, leading to a weaker bottom-line performance as EPS fell below analysts' expectations. EPS guidance was also slightly below. Management stressed an operating environment that was "tougher than expected." Overall, this was a mediocre quarter for Darden.
Darden is up 13.3% since the beginning of the year, and at $183.79 per share, has set a new 52-week high. Investors who bought $1,000 worth of Darden’s shares 5 years ago would now be looking at an investment worth $1,686.
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