DRI - Embedded Expectations Analysis - 2020 12 10
Darden Restaurants, Inc. (DRI:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 25.5x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management appears concerned about revenue declines, menu simplification initiatives, and off-premise capabilitiesSpecifically, management may lack confidence in their ability to mitigate revenue and adjusted EPS declines, maintain margins, and continue generating labor cost savings. In addition, they may have concerns about their menu simplification initiative, California operations, and weather disruptions to outdoor dining. Furthermore, management may lack confidence in their ability to enhance their off-premise capabilities, sustain the pace of new restaurant openings, and prevent restaurant overcapacity. Moreover, they may be exaggerating their brands' strength, their commitment to their current development philosophy, and their ability to increase sales volumes. Finally, management may be concerned about rising safety equipment spend, including booth partitions, and their California operations
Darden Restaurants is a restaurant company. The company owns and operates restaurants through subsidiaries in the U.S. and Canada under the Olive Garden?, LongHorn Steakhouse?, Cheddar's Scratch Kitchen?, Yard House?, The Capital Grille?, Seasons 52?, Bahama Breeze?, and Eddie V's Prime Seafood? trademarks. The company has four reportable segments: Olive Garden; LongHorn Steakhouse; Fine Dining (which includes The Capital Grille and Eddie V's); and Other Business (which includes Cheddar's Scratch Kitchen, Yard House, Seasons 52, Bahama Breeze and results from its franchise operations).
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