![]() ![]() $1.76 during the prior year's same quarter), consistent with analyst projections. For the quarter, revenues came in at ~$2.45 billion (+6.1% compared with F1Q2022), below consensus estimates of $2.47 billion, and earnings per share were $1.56 (vs. Key Takeaways From The First Quarterį1Q2023 Results Summary. (Please go through our initiation report "Darden Restaurants: Established Multi-Brand Restaurant Group Poised For Additional Growth" for our long-term opinion on the stock). Still a great company but over valued at current levels. However, given that shares have appreciated beyond our 1-year Price Target of $137/share, we are downgrading DRI to a Hold. Therefore, for FY2023, based on potential advance in sales and margins, earnings per share and free cash flows are likely to advance over FY2022 levels.Ĭonsidering that F1Q2023 results have improved our confidence that DRI is likely to meet and exceed our conservative 10-year normalized revenue growth rate of 8%, and 10-year straight-lined operating cash flows margin of ~14%, we remain constructive on the stock. In addition, we expect margin expansion due to easing commodity costs that will reduce the gap between the firm's below inflation pricing and inflationary trends, lower spending related to repair and maintenance, and some shift in sales mix towards the restaurant group's premium concepts. Therefore, for the period, earnings per share is likely to be below F2Q2022 levels, in our opinion.įor the last two quarters of FY2023, which are seasonally DRI's strongest periods in regards to customer demand, we anticipate revenue growth to moderate somewhat due to macroeconomic challenges, but remain solid as decrease in customer demand related to the $30K to $50K group will likely be offset by sustained uptake associated with guests that earn over $100K, particularly those that partake of Olive Garden and DRI's fine dining establishments. Accordingly, based on leverage from higher sales, lighter commodity cost inflation, increased labor efficiency (as newer employees turn more productive), we expect EBIT and EBITDA margins to improve sequentially and over pre-pandemic levels but come in softer on a year-over-year basis. ![]() Specifically, we anticipate that the sales momentum associated with all segments of the business evidenced over recent quarters will persist, driven by potential solid demand for catering and private dining, as folks celebrate the holidays. ![]() We expect the company to beat analyst top-line and bottom-line projections for the period. The average consensus revenue and earnings per share estimates for the quarter are ~$2.42 billion and $1.42. Darden Restaurants ( NYSE: DRI) is scheduled to report F2Q2023 Earnings on December 16, 2022, before market open. ![]()
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