Olive Garden, LongHorn owner Darden Restaurants (DRI) beats, raises guidance

December 16, 2022 8:58 AM EST
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Darden Restaurants (NYSE: DRI) reported better-than-expected results to send its shares modestly higher in pre-market Friday.

The company, which operates restaurant chains Olive Garden and LongHorn Steakhouse, posted FQ2 EPS of $1.52 on revenue of $2.49 billion (up 9.4% year-over-year), beating the average analyst consensus for earnings of $1.43 per share on revenue of $2.43B.

Comparable sales at Olive Garden and LongHorn increased by 7.6% and 7.3%, respectively. Overall, the company said it exceeded $10 billion in sales on a trailing 52-week basis for the first time in its history.

Darden’s new guidance sees full-year EPS in the range of $7.60 and $8.00, beating the consensus of $7.71. Full-year revenue is seen between $10.3B and $10.45B, again higher than the consensus of $10.31B. Comparable sales are expected to increase in the range of 5-6.5% while analysts were expecting DRI to guide for a 4.7% increase.

Darden was previously calling for revenue and comparable sales in the range of $10.2-10.4B and 4-6%, respectively.

Cowen analyst Andrew Charles reflected positively on Darden’s FQ2 results and raised guidance.

“We are pleased with Olive Garden's acceleration and LongHorn's stability in a tough backdrop for lower income consumers that led to a top-line driven EPS beat. DRI raised 2023 EPS guidance to $7.60-$8 from $7.40-$8, driven by a stronger SSS outlook and lower tax rate & share count, offset by 1% higher total inflation. We believe DRI is setting the stage to continue to beat & raise in 2023,” Charles said in a client note.

Goldman Sachs analyst Jared Garber added:

“We expect the stock to outperform today given F2Q beat, strong SSS trends at OG, and guidance raise.”

By Senad Karaahmetovic

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