Here's What to Expect When Darden Restaurants (DRI) Reports Earnings

NEW YORK (TheStreet) -- Shares of Darden Restaurants Inc  (DRI) were up 0.78% to $69.41 in late afternoon trading Monday, one day ahead of the restaurant group's fourth quarter earnings release due out Tuesday before the opening bell.

For the quarter, Darden is expected to earn 93 cents per share on revenue of $1.87 billion, according to analysts polled by Thomson Reuters.

In the same quarter of last year, the company posted a profit of 84 cents per share on sales of $2.32 billion.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says he's keeping an eye on Darden's earnings tomorrow.

"This is one that I feel like you can buy half ahead, and then buy half after as long as gasoline stays at these prices - which has always been a big factor for going out to dinner," Cramer said in a video for TheStreet.

Orlando-based Darden Restaurants is a full service restaurant company that owns and operates more than 1,500 restaurants.

The company operates under restaurant brands including Olive Garden, LongHorn Steakhouse, and The Capital Grille.

Separately, TheStreet Ratings team rates DARDEN RESTAURANTS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate DARDEN RESTAURANTS INC (DRI) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 6.9%. Growth in the company's revenue appears to have helped boost the 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 22.0% when compared to the same quarter one year prior, going from $109.70 million to $133.80 million.
  • Net operating cash flow has remained constant at $365.10 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -11.65%.
  • The debt-to-equity ratio is somewhat low, currently at 0.68, 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 0.37 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Powered by its strong earnings growth of 55.38% and other important driving factors, this stock has surged by 39.09% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: DRI Ratings Report

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