Earnings preview: Restaurants addition to drive Darden Q4 2019 results

Darden Restaurants Inc. (NYSE: DRI) is set to release its financial results for the fourth quarter of fiscal 2019 on Thursday before the market opens. The results will be benefited by the addition of net new restaurants and a blended same-restaurant sales growth.

The company has been determined in improving the basic operating factors of business including food, service, and atmosphere. The quarterly results will be aided by revenue growth across every brand. Also, the top line will be benefited by the synergies from the Cheddar’s purchase and various sales-boosting initiatives across the brands.

The company has been undertaking various initiatives for driving the growth for the fourth quarter. The initiatives included simplifying kitchen systems, operational excellence to enhance the guest experience, menu innovation, and other technology-driven moves.

Olive Garden is expected to gain from the Brand Renaissance plan and the To Go business as it focuses specifically on remodeling and bar refreshing. And, the culinary innovation is likely to drive the comps growth at LongHorn Steakhouse.

Analysts expect the company’s earnings to jump by 23.70% to $1.72 per share and revenue will rise by 5.20% to $2.24 billion for the fourth quarter. In comparison, during the previous year quarter, Darden posted a profit of $1.39 per share on revenue of $2.13 billion.

The company has surprised investors by beating analysts’ expectations in the past four quarters. It is expected that Darden Restaurants will report upbeat results for the fourth quarter. Majority of the analysts recommended a “hold” rating while expecting the stock to reach $128.14 per share in the next 52 weeks.

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For the third quarter, the company reported a 3.2% jump in earnings as 39 net new restaurants and a blended same-restaurant sales rise drove total revenues higher by 5.5%. Same-restaurant sales increased by 4.3% at Olive Garden and 3.8% at LongHorn Steakhouse.

For fiscal 2019, the company expects total sales growth of about 5.5% and same-restaurant sales growth in the range of 2.5% to 2.7%. The diluted earnings from continuing operations are anticipated to be in the range of $5.76 to $5.80 per share. Darden is looking at an effective tax rate of about 10%.

Shares of Darden Restaurants opened lower on Tuesday but changed course to the green territory on the NYSE. The stock has risen over 26% in the past year and over 7% in the past three months.

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