Darden Restaurants Posts Adjusted Profit Above Expectations - TheStreet

Darden Restaurants Posts Adjusted Profit Above Expectations

Darden Restaurants, the owner of Olive Garden, reports stronger-than-expected adjusted profit for the latest quarter and reinstates its dividend.
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Darden Restaurants  (DRI) - Get Report shares rose Thursday after the owner of Olive Garden and Capital Grille reported stronger-than-expected adjusted profit for the latest quarter and reinstated its dividend.

Darden was at $91.00, up 1.11%, in premarket trading Thursday. The stock has fallen 17% year to date through Wednesday.

Sales in the latest quarter trailed expectations. Revenue for the fiscal first quarterended Aug. 30, totaled $1.53 billion, down 28% from $2.13 billion in the year-ago quarter. The FactSet analyst consensus called for $1.56 billion in the latest quarter.

Revenue suffered from the coronavirus pandemic that has kept consumers at home. Same-restaurant sales slumped 21.9% in the latest quarter, but were narrower than analysts’ projections of a 25.5% drop.

Net income was $36.1 million, or 28 cents a share, down from $170.6 million, or $1.37, a year earlier. Adjusted profit totaled 56 cents a share in the latest quarter, smashing analysts’ estimates of 5 cents.

After suspending its divided for May and August, Darden will pay out 30 cents a share in November. That represents a 66% drop from the February dividend of 88 cents.

Darden predicted sales will slide 18% in the fiscal second quarter to $1.69 billion from $2.06 billion a year earlier, with per-share earnings at 65 cents to 75 cents. That compares to analysts’ call for sales of $1.77 billion and earnings of 35 cents.

In a commentary last week, Morningstar analyst R.J. Hottovy noted that investors are turning more bullish on restaurants. But, “we believe several expected industry survivors aren't getting enough attention, including … no-moat Darden.” He put fair value for Darden at $95.