NEW YORK (TheStreet) -- Shares of Darden Restaurants (DRI) are down 0.45% to $55.32 in pre-market trade after it was reported that the company, whose board was ousted last month after an activist investor battle, said its chief financial officer is retiring as part of an overhaul that includes job cuts and other cost-saving measures, Bloomberg Businessweek reports.
Brad Richmond will leave in March unless a new CFO is found sooner, Orlando, FL-based Darden said in a statement.
The company also is cutting one layer of field operations for its restaurants, eliminating about 60 jobs and selling its airplanes, which will save about $20 million a year, it said.
Last month, Starboard Value LP took over the company's board and CEO Clarence Otis stepped down earlier than planned. Darden, owner of Olive Garden and LongHorn Steakhouse restaurant chains, has been revamping its leadership and strategies under new Chairman Jeffery Smith, Starboard's CEO, Businessweek noted.
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, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.4%. Since the same quarter one year prior, revenues slightly increased by 4.2%. 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.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 616.8% when compared to the same quarter one year prior, rising from $70.20 million to $503.20 million.
- The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.31 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Net operating cash flow has significantly decreased to $44.60 million or 79.44% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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.
- You can view the full analysis from the report here: DRI Ratings Report