Darden Restaurants (DRI) Hits New Lifetime High Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Darden Restaurants ( DRI) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Darden Restaurants as such a stock due to the following factors:

  • DRI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $84.4 million.
  • DRI has traded 323,176 shares today.
  • DRI is trading at a new lifetime high.

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More details on DRI:

Darden Restaurants, Inc. owns and operates full service restaurants in the United States and Canada. It operates restaurants under the Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's, and Yard House brand names. The stock currently has a dividend yield of 3.2%. DRI has a PE ratio of 72. Currently there are 10 analysts that rate Darden Restaurants a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for Darden Restaurants has been 1.4 million shares per day over the past 30 days. Darden has a market cap of $8.7 billion and is part of the services sector and leisure industry. Shares are up 18% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Darden Restaurants as a buy. 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 ratings report include:
  • 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.

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