Darden Restaurants owns and operates restaurants under the Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's, and Yard House brand names. The company was founded in 1968 and is based in Orlando, Florida.
DRI Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Darden Restaurants Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Darden Restaurants Inc ranked in the 13th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. The most interesting components of our discounted cash flow analysis for Darden Restaurants Inc ended up being:
Darden Restaurants Inc's effective tax rate, as measured by taxes paid relative to net income, is at 34 -- greater than 91.6% of US stocks with positive free cash flow.
Darden Restaurants Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -4.13. This coverage rate is greater than that of merely 13.86% of stocks we're observing for the purpose of forecasting via discounted cash flows.
The weighted average cost of capital for the company is 11. This value is greater than 69.2% stocks in the Consumer Cyclical sector that generate free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
Want more companies with a valuation profile/forecast similar to that of Darden Restaurants Inc? See BLMN, DIN, RL, WYND, and XELB.
Darden Restaurants' (DRI) stock price has meaningfully outperformed S&P 500 (SPY) since my last article, gaining over 28% versus S&P 500’s ~6.4% gains. The company recently reported very strong operating performance and profitability. While the company’s Q1 2021 sales of $1.53 bn slightly missed the consensus expectation by ~$20 mn,...
GS Analytics on Seeking Alpha | September 30, 2020
Argus upgrades Darden Restaurants (DRI) to a Buy rating from Hold and assigns a price target of $115."We think that Darden turned the corner in 1Q21 with a more moderate decline in comp sales (down 29% after a sharper drop of 48% in 4Q20) and well-above-consensus EPS. Management expects further...
A worker advocacy group on Tuesday filed a complaint claiming Darden Restaurants Inc's policy of encouraging customers to tip servers and paying them the lower minimum wage for tipped employees causes workers to be subjected to sexual harassment and pay discrimination.