Will Darden Restaurants (DRI) Stock Fall on Disappointing Outlook?
NEW YORK (TheStreet) -- Darden Restaurants (DRI) - Get Report recently announced positive financial results for the fourth quarter and fiscal year ending in May of 2016 but provided a disappointing outlook for fiscal year 2017 earnings.
Before yesterday's market open, the Orlando, FL-based restaurant company announced earnings that beat expectations at $1.10 per share.
Analysts at Jefferies dropped their price target on the stock to $64 from $66, but maintained their "hold" rating.
Darden Restaurants is positioned as the leader in the casual dining industry, and the company "has successfully repositioned [its] operations philosophy," the firm said.
However, Jefferies noted that the stock faces some risks such as wage inflation in the upcoming year.
The firm added that commodities are expected to be deflationary early in fiscal year 2017, but "could turn inflationary" in the second half as wage inflation increases as much as 2.5%-3.5%.
Jefferies also noted that Darden's fourth quarter 2016 results were "saved" by strong Mother's Day weekend sales.
Shares of Darden Restaurants closed at $63.34 in Thursday's trading session.
Separately, TheStreet Ratings rated this stock as a "buy" with a ratings score of A+.
The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity.
TheStreet Ratings feels its strengths outweigh the fact that the company has had sub par growth in net income.
You can view the full analysis from the report here: DRI
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.