Why Darden Restaurants Inc. Stock Popped Today

MarketsMotley Fool

What happened

Shares of Darden Restaurants (NYSE: DRI) climbed 6.7% Tuesday after the company announced stronger-than-expected quarterly results.

Continue Reading Below

More specifically, for the second quarter of its fiscal 2018, Darden's revenue a climbed 14.6% year over year to $1.88 billion -- comfortably above the $1.85 billion investors were anticipating -- including 11.5% growth related to its acquisition of Cheddar's Scratch Kitchen earlier this year, and a 3.1% increase in blended same-restaurant sales from Darden's legacy brands.

On the bottom line, that translated to 14.1% growth in adjusted (non-GAAP) earnings per diluted share to $0.73, above analysts' consensus estimates for adjusted earnings of $0.70 per share.

So what

Darden CEO Gene Lee stated:

To be sure, within its legacy brands, Darden enjoyed same-restaurant sales growth of 3% at Olive Garden, 3.8% at LongHorn Steakhouse, 3.8% at The Capital Grille, 6.8% at Eddie V's, 2% at Yard House, and 2.5% at Bahama Breeze. Only its smaller Seasons 52 chain (with 41 locations) saw same-store sales dip, and even then, it was a modest 0.5% decline.

Now what

If that wasn't enough, Darden also increased its expectations for the full fiscal year 2018, calling for same-restaurant sales growth of 2%, new restaurant openings of 40, and total sales growth of 13% -- all near the high end of previous guidance. Management also anticipates full-year adjusted earnings per diluted share in the range of $4.45 to $4.53, up from its prior outlook range of $4.38 to $4.50.

All things considered, there was nothing to dislike about Darden's admirable performance today, and it's no surprise to see shares setting a fresh 52-week high in response.

10 stocks we like better than Darden RestaurantsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Darden Restaurants wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of December 4, 2017

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.