NEW YORK (TheStreet) -- Darden Restaurants (DRI) shares are up 3.8% to $49.40 on Monday after analysts at CLSA upgraded the stock to "outperform" from "underperform" while making a valuation call on the company.
The Olive Garden and Longhorn Steakhouse parent company reported full year EPS guidance between $2.22 to $2.30 on Friday, in line with analysts estimates of $2.23.
The company also announced that it expects to maintain its 55 cent per share quarterly dividend.
TheStreet has coverage of Olive Garden's bid to turn around flagging sales here.
TheStreet Ratings team rates DARDEN RESTAURANTS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate DARDEN RESTAURANTS INC (DRI) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DRI's revenue growth has slightly outpaced the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- DARDEN RESTAURANTS INC's earnings per share declined by 39.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, DARDEN RESTAURANTS INC reported lower earnings of $1.38 versus $1.80 in the prior year. This year, the market expects an improvement in earnings ($2.25 versus $1.38).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, DARDEN RESTAURANTS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 35.0% when compared to the same quarter one year ago, falling from $133.10 million to $86.50 million.
- You can view the full analysis from the report here: DRI Ratings Report
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