Shares of Darden Restaurants jumped almost 4% in early trade on Thursday after the restaurant company posted better-than-expected fiscal 3Q results.
Darden’s (DRI) 3Q earnings of $0.98 per share plunged 48.4% on a year-over-year basis but outpaced Street estimates of $0.69 per share.
Total sales of $1.73 billion topped analysts’ expectations of $1.63 billion. However, revenues declined 26% year-over-year due to negative blended same-restaurant sales of 26.7%.
Moreover, the company’s segments including Olive Garden, Longhorn steakhouse, and Fine Dining reported lower sales. (See Darden stock analysis on TipRanks)
Additionally, Darden announced an increased quarterly cash dividend of $0.88 per share, up 137.8% from the prior payout of $0.37 per share. The new dividend will be paid on May 3 to shareholders of record as of April 9. The company’s annual dividend of $3.52 per share now reflects a dividend yield of 2.55%. Furthermore, a new share repurchase program of up to $500 million was authorized.
For the fourth quarter of fiscal 2021, the company projects total sales of $2.1 billion, higher than the consensus estimate of $1.95 billion. Moreover, its earnings guidance range of $1.60-$1.70 per share came in ahead of analysts’ expectations of $1.24.
On March 19, Barclays analyst Jeff Bernstein increased the stock’s price target to $145 (4.2% upside potential) from $131 and reiterated a Buy rating as the analyst believes that the company is well-positioned for fundamental and stock price outperformance.
Darden shares have exploded 129% over the past year, while the stock still scores a Strong Buy consensus rating based on 13 Buys vs. 3 Holds. That’s alongside an average analyst price target of $148.73, which implies around 7% upside potential to current levels.
Additionally, Darden scores a 9 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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