Darden Restaurants, Inc. (NYSE:DRI)

This stock isn't going anywhere with 1000s of family friendly restaurants. As an Italian olive garden is kind of a slap in the face to traditional Italian food but at the same time I can't stop going for endless bread sticks and chicken nyoke soup

Unfairly punished for one brands data on a strong company. Time for a fool to buy

http://www.fool.com/investing/general/2011/11/29/rising-star-buy-darden-restaurants.aspx

I bought this stock in 2000 for about $12 per share. Was a great buy then and I enjoyed a great 300% return. But the skies don't look so blue these days for Darden Restaurants, Inc. Time to let go. Underperform.

I'm impressed DRI navigated the recession so well. I like the yield and the broad portfolio of brands. I think cost inflation could moderate significantly enough to boost margins next year. Mostly, just interested in following this one for a while. Outperform.

pe was13.7. steakhouse, red lobster and olive garden rests.

Longhorn is the new Ruth's Chris, Olive Garden is the new Maggiano's. ENDLESS SHRIMP!

I love the restaurants and the dividend is substantial, increasing and safe.....should provide nice downside protection in a volatile market

jc Dividend pick

I made DRI a CAPS pick on Dec17, 2010. It was rated 2 stars by CAPS members. As of now, in the wee hours of July 21, 2011 (it's 1:45 AM here) it's still rated 2 stars.
This is where thinking for yourself comes in, people.
I've been meaning to do this for some time. You red-thumbers with start prices for Darden even below $20 will never give up, will you?
Really? You honestly think this is ever going to $18 again? Get real. Throw in the towel, already. Talk about ridiculous.
Darden closed today (well...ok, yesterday) at $53.07. With a dividend of $1.72 a year, that gives it a current dividend yield of 3.24%...according to CAPS, its average dividend yield over the last 5 years is 2%.
Gee. That dividend yield hasn't suddenly risen because of a falling stock price, now...has it?
Maybe...just maybe...it's THIS:

..........................................DIVIDENDS.................................................................

..........................................2/1....................5/1.................8/1..................11/1

2008................................$0.18............... $0.18.............$0.20...............$0.20
2009................................$0.20................$0.20.............$0.25...............$0.25
2010................................$0.25................$0.25.............$0.32...............$0.32
2011................................$0.32................$0.32.............$0.43

The dividend payout ratio, by the way, is currently 38%.

Before we go any further, let's have a look at "Morningstar's Take, from Morningstar.com:

"Darden Restaurants has separated itself from other participants in the $170B casual dining market through its ability to manage profitable core brands while developing emergent concepts. Darden's mature brands - Olive Garden and Red Lobster - have persevered despite a turbulent consumer environment, and we believe nascent chains like Longhorn Steakhouse provide attractive growth prospects. Although slower consumer spending will likely weigh on Darden's top-line growth during the next few quarters, we expect the firm to navigate the economic downturn and emerge as an even stronger player in the casual dining industry."

Hmm. Wonder when they wrote that?

.......................................EARNINGS PER SHARE....................................................

............2010.....2009.....2008.....2007.....2006.....2005.....2004.....2003.....2002.....2001...................
...........$2.84....$2.65....$2.55....$1.35....$2.16....$1.78....$1.36....$1.31....$1.30....$1.06

I'd say they're navigating pretty well so far....

With a dividend payout ratio of 38%, and a current dividend that is up 139% since 2008, yielding 3.24% as of yesterday's close, as far as I'm concerned, it's rated 2 stars by CAPS because of a faulty rating system giving too much weight to a few red thumbs that refuse to give up.
Think for yourself, brother. Don't let these guys do it for you. That's a mistake.
The 5-year dividend growth rate is 27.33%.
The last dividend increase, raising the quarterly payout from $0.32 to $0.43, was a whopping 34%.
Debt/equity is 0.8. Interest coverage is 7.3.
CAPS lists the P/E as 15.8, the 5-year high P/E as 34.5, and the 5-year low P/E as 5.
Return on equity, at about 24%, is much in line with the return on equity over the past 10 years, although they've made significant progress toward deleveraging.
I don't remember everything, but if you go to Morningstar.com and look, you will find that net margin is at a 10-year high.
Morningstar lists the P/E as slightly different from what I find here at CAPS. Morningstar lists the P/E at 16.5 - but Morningstar also lists a forward P/E - of 12.
Look at the earnings per share table again.
Morningstar lists the earnings per share for the trailing twelve months as $3.20.
Funny. Morningstar, with its glowing "Morningstar's Take", only gives DRI a 3-star rating itself.
But if you look further down the quote page, the consensus rating of 31 analysts for DRI is "1.3".
I'm not done.
We're first going to talk about this sometimes useful, sometimes useless little thing called the "current ratio".
Yup. Time was, before I read "Warren Buffet And The Interpretation Of Financial Statements", I'd have looked at Darden's current ratio of 0.5 and at that point my research would be DONE.
You can't look at it in isolation, though. Buy that book if you don't already have it.

Here's an excerpt:

"The funny thing about a lot of companies with a durable competitive advantage is that quite often their current ratio is below the magical one. Moody's comes in at .64, Coca-Cola at .95, Procter & Gamble at .82, and Anheuser-Busch at .88. Which, from an old-school perspective, means that these companies might have difficulties paying current liabilities. What is really happening is that their earning power is so strong they can easily cover their current liabilities. Also, as a result of their tremendous earning power, these companies have no problem tapping into the cheap, short-term commercial paper market if they need any short-term cash.
Because of their great earning power, they can also pay out generous dividends and make stock repurchases, both of which diminish cash reserves and help pull their current ratios below one. But it is the consistency of their earning power, which comes with having a durable competitive advantage, that ensures they can cover their current liabilities and not fall prey to the vicissitudes of business cycles and recessions."

Some of the companies mentioned in that excerpt have horded a little more cash recently (KO's current ratio is 1.10 now) but Procter & Gamble's current ratio is still around .8. ATT isn't hurting and their current ratio is .6.

I'm still not done. I have yet to put in MY 2 cents.

And here it is. All this paranoia about "rising commodity costs." Even Standard & Poors refers to worries about "rising commodity costs". S & P also gives DRI 3 stars.

I'm a cook at a very busy restaurant. Let me tell you something. You people, in general, are going to continue eating out more and more and MORE. If we need to raise prices you know what? You'll pay them! I think it's ludicrous to imagine that even as we spend hours and hours during lunch or dinner rushes unable to get off the cook line for even a minute, as people are overwhelming the kitchen crew, that many or at least some of our customers may be investors that would worry about our being unable to meet "rising commodity costs."

You have no idea just how ridiculous that is.

What? You're still with me? Well...I'm finally done.

With oil prices going down the profit margins for restaurants will be increasing.

I bought this a year ago, and the stock has hardly moved. (2.25% up) I maintain it was a good stock to buy last year. The company's EPS increased by roughly 11%. (3.23 from 2.86) Although recession ended several months ago, for all intents and purposes, it feels recessionary. However, once consumers loosen their wallets and trade up from MCD and Chipotle, the company's earnings and EPS will rise even faster (than 11%). Commodity price increase etc will without any doubt pressure the business when the economy truly comes out of the recession. There is always slight operating leverage in the business model that will help the EPS growth along with top line growth. In addition, the management has kept the shares outstanding under check and paid a decent dividend maintaining a strong downside protection. This one's a keeper.

Have you ever eaten at an Olive Garden? Its freakn awesome! This stock is recession resistant too.

Back in December DRI was added to my caps. It has gained over 40% since then. I'm confident that they will continue. Can't figure out why their rating is still 2 stars.

Popular restaurants.

Will increase as economy comes back (eventually)

Because of the BP oil spill, fish in the gulf are toxic for years to come. Today ( 6/22/10 ) CNN said that Red Lobster has already starting to cut back toxic menu items like Shrimp, Flounder and Swordfish. Also Tourism in the Gulf states has dropped like a rock since DRI's last earnings release, because of the oil spill. So any of DRI's restaurants in the Gulf have seen a drop off in travelers.

DRI's last quarter earnings were good, but their 8/31/10 earnings will be a nightmare. These earnings will show a dramatic drop that will stun the analysts. DRI is a great company, but a disaster is upon them and they'll be force to shut down numerous restaurants in the gulf states by year end.

Plus people will be afraid to eat any seafood and will keep with beef and chicken, which will serious hurt DRI's seafood franchises.

Here's some links of the fish effected in the gulf and there's quite a variety

http://www.orangebeach.ws/Reference/Pictorial_Guide_to_Fish.html

(Click the below link) On May 24, 2010, U.S. Commerce Secretary Gary Locke determined there has been a fishery disaster in the Gulf of Mexico due to the economic impact on commercial and recreational fisheries from the ongoing Deepwater Horizon oil spill. The affected area includes the states of Louisiana, Mississippi and Alabama. (today's 06/22/10 an the US seafood restuarants and industry are a disaster along the gulf coast)

http://www.squidoo.com/gulf-coast-saltwater-fishing

i would buy this one because everyone loves to eat out once in a while. no matter what the price is.

Restaurant industry has changed for the foreseeable future as a result of the decline in discretionary consumer income and over-capacity of restaurant outlets. Smaller and/or weaker concepts will be squeezed out of business and the strong operations will get stronger – DRI’s control over all restaurant operations (no franchisees) will keep the corporate focus on driving profitable transactions and squeezing inefficiencies out of the restaurant operations.

Average unit volume (AUV) at core concepts…

Red Lobster AUV is $3.8 million

Olive Garden AUV is 4.8 million

...far exceed that of competitors:

Applebees AUV is less than $2.5 million

Chili’s AUV is $3.2 million

TGI Fridays is approximately $3.5 million.

All of the brands operated by DRI will realize an increase in transactions as consumer confidence improves and unemployment declines. In an effort to limit the loss of transactions, the industry is experiencing pricing pressure from competitive value promotions (for example, Applebee's 2 for $20 meals). Red Lobster and Olive Garden same-store-sales declines of less than 5% (versus a decline of more than 5% for the industry) suggest DRI has a favorable value perception and an opportunity to increase the average check / improve its menu mix when consumers are not as price sensitive.

Through the acquisition of RARE Hospitality, DRI diversified into the segment that has been the most severely impacted by the recession, the steakhouse segment. The size of DRI’s advertising budget will position the DRI steakhouse concepts for a strong rebound when consumer sentiment improves. While waiting for the transactions to return, Longhorn Steakhouse and The Capital Grill will benefit from DRI’s best practices in operations, technology and purchasing power.

Finally, DRI has favorable funded debt and financing available at a time when the credit markets have all but dried up for restaurants. DRI’s capitalization remains sufficient to support ongoing capital improvements and buyback stock as well as entertain any opportunistic acquisition that may present itself.