Is Darden Restaurants Inc. (DRI) A Risky Investment?

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RTX Stock
RTX Stock

Darden Restaurants Inc. (NYSE:DRI) finished Wednesday with a subtraction of -$1.47 to close at $131.28, a downside of -1.11 percent. An average of 1,489,860 shares of common stock have been traded in the last five days. There was a gain of $0.98 in the past week, and it reached a new high 2 times over the past 12 months. The last 20 days have seen an average of 1,055,825 shares traded, while the 50-day average volume stands at 1,034,240.

DRI stock has increased by 3.26% in the last month. The company shares reached their 1-month lowest point of $122.29 on 09/01/22. With the stock rallying to its 52-week high on 01/05/22, shares of the company touched a low of $110.96 and a high of $164.28 in 52 weeks. It has reached a new high 3 times so far this year and lost -12.85% or -$19.36 in price. In spite of this, the price is down -20.09% from the 52-week high.


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Insider Transactions

51 days have passed since Darden Restaurants Inc. (DRI) last reported insider trading activity. LEE EUGENE I JR, who is Executive Chairman, most recently acquired $41,442 shares at $124.71 per share on Aug 02. In this transaction, the insider spent $5,168,253. Director, MENSAH NANA, disposed of 567 shares at a price of $117.03 on Jul 15. The insider now owns more than $66,355 worth of shares. Prior to that, Chairman and CEO LEE EUGENE I JR went on to Sale 76,725 shares at $152.38 each on Jan 05. An amount of $11,691,397 was transacted.

Valuation Metrics

Darden Restaurants Inc. (DRI) has a trailing price-to-earnings (P/E) ratio of 17.70. The stock’s beta is 1.28. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 1.68, the price-to-book (PB) ratio at 7.43, and the price-to-cash flow ratio at 51.19.

The company has a payout ratio of 60.30%. The company’s most recent quarterly dividend payment was $1.21 a share, representing a up of 10.0% from $1.10 last year. Its latest increase dividend $0.11 reported on Thursday June 23 2022.

Financial Health

The quick ratio of Darden Restaurants Inc. for the three months ended May 30 was 0.50, and the current ratio was 0.60, indicating that the company is not able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.87 and a total debt to equity ratio of 0.88 for the quarter ending May 30. Its gross profit as reported stood at $2.0 billion compared to revenue of $9.63 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Darden Restaurants Inc.’s return on assets was 9.20%.

Earnings Surprise

For the three-month period that ended May 30, Darden Restaurants Inc. had $901.0 million in total debt. In the quarter under review, the net income was up than the previous quarter. The company posted a net income of $281.7 million in the quarter, while revenues were shrunk -30.81%. The analyst consensus anticipated Darden Restaurants Inc.’s latest quarter earnings to come in at $2.21 per share, but it turned out to be $2.27, a 2.70% surprise. For the quarter, EBITDA amounted to $430.5 million. Shareholders own equity worth $123.95 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Darden Restaurants Inc. (DRI) price momentum. RSI 9-day as of the close on 21 September was 55.67%, suggesting the stock is Neutral, with historical volatility in this time frame at 27.37%.

As of today, DRI’s price is $131.33 +0.75% or $0.98 from its 5-day moving average. DRI is currently trading +3.39% higher than its 20-day SMA and -1.96% lower than its 100-day SMA. However, the stock’s current price level is +13.34% above the SMA50 and -7.78% below the SMA200.

The stochastic %K and %D were 83.28% and 79.84%, respectively, and the average true range (ATR) was 3.49. With the 14-day stochastic at 69.69% and the average true range at 3.47, the RSI (14) stands at 55.55%. The stock has reached 1.03 on the 9-day MACD Oscillator while the 14-day reading was at 2.67.

Analyst Ratings

Bernstein launched coverage on Darden Restaurants Inc. (NYSE: DRI) in its analyst report released on September 08, 2022. The firm assigned the stock an Outperform rating. The consensus rating for Darden Restaurants Inc. (DRI) among analysts is Overweight. According to current brokerage recommendations, 0 brokerage firms advise that investors sell DRI, while 9 suggest investors hold. There are 0 analysts who rate the stock as underweight. The stock is rated overweight by 5 analysts, while 16 others rate it as a “buy”.

What is DRI’s price target for the next 12 months?

Analysts predict a range of price targets between $122.00 and $156.00, with a median target of $139.00. Taking a look at these predictions, the average price target given by analysts for Darden Restaurants Inc. (DRI) stock is $140.42.

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