The 10-second takeaway
For the quarter ended Feb. 26 (Q3), Darden Restaurants met expectations on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue increased, and GAAP earnings per share expanded significantly.
Gross margins contracted, operating margins increased, and net margins were steady.
Darden Restaurants reported revenue of $2.16 billion. The 27 analysts polled by S&P Capital IQ anticipated revenue of $2.15 billion on the same basis. GAAP reported sales were 9.3% higher than the prior-year quarter's $1.98 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $1.25. The 30 earnings estimates compiled by S&P Capital IQ predicted $1.24 per share. GAAP EPS of $1.25 for Q3 were 16% higher than the prior-year quarter's $1.08 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 24.7%, 50 basis points worse than the prior-year quarter. Operating margin was 11.4%, 10 basis points better than the prior-year quarter. Net margin was 7.6%, about the same as the prior-year quarter.
Next quarter's average estimate for revenue is $2.13 billion. On the bottom line, the average EPS estimate is $1.19.
Next year's average estimate for revenue is $8.05 billion. The average EPS estimate is $3.60.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 382 members rating the stock outperform and 113 members rating it underperform. Among 154 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 130 give Darden Restaurants a green thumbs-up, and 24 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Darden Restaurants is outperform, with an average price target of $53.59.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Darden Restaurants. The Motley Fool has a disclosure policy.