Bear of the Day: Darden Restaurants (DRI) - Bear of the Day

By
A A A

Despite having a unique proposition driven by menu improvements and a balanced portfolio, Darden Restaurants ( DRI ) has been facing challenges in the recent times. The latest decline in comps at three of its brands -- Red Lobster, Olive Garden and LongHorn Steakhouse -- as well as the failure of promotional offers plagued the company in the second quarter.

Stiff competition resulting in higher discounting rates, failure of some promotional offers, probability of higher 2013 SG&A expenses as well as cautious consumer spending will add to the woes. Most importantly, Darden recently slashed its earnings per share guidance for fiscal 2013 to reflect the dilutive effect of the latest Yard House acquisition and the adverse impact from Hurricane Sandy.

Our six-month target price of $42.00 equates to about 12.4x our estimate for 2013. The target price implies an expected negative return of 7.4% over that period. We recommend an Underperform recommendation on the shares.

DARDEN RESTRNT (DRI): Free Stock Analysis Report

DARDEN RESTRNT (DRI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks

Referenced Stocks: DRI

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

60%

Most Active by Volume

108,894,194
  • $3.915 ▲ 2.49%
72,600,976
  • $7.31 ▼ 5.80%
58,342,901
  • $30.51 ▼ 6.21%
56,008,174
  • $15.295 ▼ 1.83%
53,170,601
    $22.76 unch
49,248,008
  • $95.8499 ▼ 2.34%
42,951,449
  • $45.24 ▼ 2.29%
41,833,916
  • $95.12 ▼ 1.92%
As of 7/31/2014, 03:49 PM