DARDEN RESTAURANTS INC (DRI) Stock Fundamental Analysis
NYSE:DRI - New York Stock Exchange, Inc. - US2371941053 - Common Stock - Currency: USD
Overall DRI gets a fundamental rating of 5 out of 10. We evaluated DRI against 131 industry peers in the Hotels, Restaurants & Leisure industry. Both the profitability and the financial health of DRI get a neutral evaluation. Nothing too spectacular is happening here. DRI is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year DRI was profitable.
In the past year DRI had a positive cash flow from operations.
DRI had positive earnings in each of the past 5 years.
DRI had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With a decent Return On Assets value of 8.34%, DRI is doing good in the industry, outperforming 79.39% of the companies in the same industry.
DRI has a better Return On Equity (45.41%) than 91.60% of its industry peers.
With a decent Return On Invested Capital value of 12.03%, DRI is doing good in the industry, outperforming 77.10% of the companies in the same industry.
DRI had an Average Return On Invested Capital over the past 3 years of 12.45%. This is in line with the industry average of 13.91%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.34% | ||
| ROE | 45.41% | ||
| ROIC | 12.03% |
ROA(3y)9%
ROA(5y)8.46%
ROE(3y)45.28%
ROE(5y)40.31%
ROIC(3y)12.45%
ROIC(5y)11.32%
1.3 Margins
DRI has a Profit Margin of 8.69%. This is in the better half of the industry: DRI outperforms 68.70% of its industry peers.
DRI's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 11.69%, DRI is in the better half of the industry, outperforming 61.07% of the companies in the same industry.
DRI's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 21.75%, DRI is doing worse than 84.73% of the companies in the same industry.
In the last couple of years the Gross Margin of DRI has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 11.69% | ||
| PM (TTM) | 8.69% | ||
| GM | 21.75% |
OM growth 3Y-1.01%
OM growth 5Y15.81%
PM growth 3Y-4.23%
PM growth 5YN/A
GM growth 3Y1.84%
GM growth 5Y3.94%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), DRI is creating some value.
The number of shares outstanding for DRI has been reduced compared to 1 year ago.
Compared to 5 years ago, DRI has less shares outstanding
DRI has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 2.63 indicates that DRI is not a great score, but indicates only limited risk for bankruptcy at the moment.
The Altman-Z score of DRI (2.63) is better than 67.94% of its industry peers.
DRI has a debt to FCF ratio of 2.06. This is a good value and a sign of high solvency as DRI would need 2.06 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 2.06, DRI belongs to the best of the industry, outperforming 83.97% of the companies in the same industry.
DRI has a Debt/Equity ratio of 0.92. This is a neutral value indicating DRI is somewhat dependend on debt financing.
DRI's Debt to Equity ratio of 0.92 is fine compared to the rest of the industry. DRI outperforms 60.31% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.92 | ||
| Debt/FCF | 2.06 | ||
| Altman-Z | 2.63 |
ROIC/WACC1.32
WACC9.13%
2.3 Liquidity
A Current Ratio of 0.42 indicates that DRI may have some problems paying its short term obligations.
The Current ratio of DRI (0.42) is worse than 80.92% of its industry peers.
DRI has a Quick Ratio of 0.42. This is a bad value and indicates that DRI is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of DRI (0.28) is worse than 87.02% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.42 | ||
| Quick Ratio | 0.28 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 7.54% over the past year.
DRI shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 24.78% yearly.
The Revenue has been growing slightly by 6.03% in the past year.
The Revenue has been growing by 9.12% on average over the past years. This is quite good.
EPS 1Y (TTM)7.54%
EPS 3Y8.81%
EPS 5Y24.78%
EPS Q2Q%12.45%
Revenue 1Y (TTM)6.03%
Revenue growth 3Y7.84%
Revenue growth 5Y9.12%
Sales Q2Q%10.63%
3.2 Future
DRI is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.30% yearly.
The Revenue is expected to grow by 4.94% on average over the next years.
EPS Next Y12.94%
EPS Next 2Y10.03%
EPS Next 3Y9.74%
EPS Next 5Y8.3%
Revenue Next Year8.3%
Revenue Next 2Y6%
Revenue Next 3Y5.76%
Revenue Next 5Y4.94%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 21.92, the valuation of DRI can be described as rather expensive.
68.70% of the companies in the same industry are more expensive than DRI, based on the Price/Earnings ratio.
DRI is valuated rather cheaply when we compare the Price/Earnings ratio to 27.54, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 19.41 indicates a rather expensive valuation of DRI.
Based on the Price/Forward Earnings ratio, DRI is valued a bit cheaper than 61.83% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 36.44. DRI is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.92 | ||
| Fwd PE | 19.41 |
4.2 Price Multiples
DRI's Enterprise Value to EBITDA ratio is in line with the industry average.
70.99% of the companies in the same industry are more expensive than DRI, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.78 | ||
| EV/EBITDA | 13.7 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
DRI has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)1.69
PEG (5Y)0.88
EPS Next 2Y10.03%
EPS Next 3Y9.74%
5. Dividend
5.1 Amount
DRI has a Yearly Dividend Yield of 2.75%. Purely for dividend investing, there may be better candidates out there.
DRI's Dividend Yield is rather good when compared to the industry average which is at 3.64. DRI pays more dividend than 84.73% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.35, DRI has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.75% |
5.2 History
On average, the dividend of DRI grows each year by 16.98%, which is quite nice.
DRI has paid a dividend for at least 10 years, which is a reliable track record.
DRI has decreased its dividend recently.
Dividend Growth(5Y)16.98%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
62.74% of the earnings are spent on dividend by DRI. This is not a sustainable payout ratio.
DRI's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP62.74%
EPS Next 2Y10.03%
EPS Next 3Y9.74%
209.54
+2.41 (+1.16%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners86.92%
Inst Owner Change-0.6%
Ins Owners0.24%
Ins Owner Change-3.18%
Market Cap24.52B
Analysts77.14
Price Target237.13 (13.17%)
Short Float %3.84%
Short Ratio2.79
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.75% |
Yearly Dividend5.58
Dividend Growth(5Y)16.98%
DP62.74%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.75%
Min EPS beat(2)-0.85%
Max EPS beat(2)-0.66%
EPS beat(4)0
Avg EPS beat(4)-1.86%
Min EPS beat(4)-5.51%
Max EPS beat(4)-0.42%
EPS beat(8)3
Avg EPS beat(8)-0.23%
EPS beat(12)6
Avg EPS beat(12)0.31%
EPS beat(16)9
Avg EPS beat(16)0.25%
Revenue beat(2)0
Avg Revenue beat(2)-1.71%
Min Revenue beat(2)-2.74%
Max Revenue beat(2)-0.68%
Revenue beat(4)0
Avg Revenue beat(4)-1.8%
Min Revenue beat(4)-2.74%
Max Revenue beat(4)-0.68%
Revenue beat(8)0
Avg Revenue beat(8)-1.62%
Revenue beat(12)2
Avg Revenue beat(12)-1.14%
Revenue beat(16)5
Avg Revenue beat(16)-0.79%
PT rev (1m)10.56%
PT rev (3m)10.51%
EPS NQ rev (1m)1.17%
EPS NQ rev (3m)0.69%
EPS NY rev (1m)-0.26%
EPS NY rev (3m)-0.4%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)-0.03%
Revenue NY rev (1m)-0.48%
Revenue NY rev (3m)-0.54%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.92 | ||
| Fwd PE | 19.41 | ||
| P/S | 2.03 | ||
| P/FCF | 23.78 | ||
| P/OCF | 14.44 | ||
| P/B | 10.61 | ||
| P/tB | N/A | ||
| EV/EBITDA | 13.7 |
EPS(TTM)9.56
EY4.56%
EPS(NY)10.8
Fwd EY5.15%
FCF(TTM)8.81
FCFY4.21%
OCF(TTM)14.51
OCFY6.93%
SpS103.19
BVpS19.75
TBVpS-5.93
PEG (NY)1.69
PEG (5Y)0.88
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.34% | ||
| ROE | 45.41% | ||
| ROCE | 13.65% | ||
| ROIC | 12.03% | ||
| ROICexc | 12.31% | ||
| ROICexgc | 17.53% | ||
| OM | 11.69% | ||
| PM (TTM) | 8.69% | ||
| GM | 21.75% | ||
| FCFM | 8.54% |
ROA(3y)9%
ROA(5y)8.46%
ROE(3y)45.28%
ROE(5y)40.31%
ROIC(3y)12.45%
ROIC(5y)11.32%
ROICexc(3y)12.83%
ROICexc(5y)11.9%
ROICexgc(3y)17.75%
ROICexgc(5y)16.23%
ROCE(3y)14.18%
ROCE(5y)12.88%
ROICexcg growth 3Y0.68%
ROICexcg growth 5Y21.09%
ROICexc growth 3Y-1.77%
ROICexc growth 5Y19.57%
OM growth 3Y-1.01%
OM growth 5Y15.81%
PM growth 3Y-4.23%
PM growth 5YN/A
GM growth 3Y1.84%
GM growth 5Y3.94%
F-Score7
Asset Turnover0.96
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.92 | ||
| Debt/FCF | 2.06 | ||
| Debt/EBITDA | 1.1 | ||
| Cap/Depr | 129.26% | ||
| Cap/Sales | 5.52% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 88.11% | ||
| Profit Quality | 98.28% | ||
| Current Ratio | 0.42 | ||
| Quick Ratio | 0.28 | ||
| Altman-Z | 2.63 |
F-Score7
WACC9.13%
ROIC/WACC1.32
Cap/Depr(3y)139.71%
Cap/Depr(5y)121.08%
Cap/Sales(3y)5.57%
Cap/Sales(5y)4.93%
Profit Quality(3y)96.96%
Profit Quality(5y)105.45%
High Growth Momentum
Growth
EPS 1Y (TTM)7.54%
EPS 3Y8.81%
EPS 5Y24.78%
EPS Q2Q%12.45%
EPS Next Y12.94%
EPS Next 2Y10.03%
EPS Next 3Y9.74%
EPS Next 5Y8.3%
Revenue 1Y (TTM)6.03%
Revenue growth 3Y7.84%
Revenue growth 5Y9.12%
Sales Q2Q%10.63%
Revenue Next Year8.3%
Revenue Next 2Y6%
Revenue Next 3Y5.76%
Revenue Next 5Y4.94%
EBIT growth 1Y2.95%
EBIT growth 3Y6.75%
EBIT growth 5Y26.36%
EBIT Next Year49.49%
EBIT Next 3Y17.68%
EBIT Next 5Y12.28%
FCF growth 1Y4.86%
FCF growth 3Y6.51%
FCF growth 5Y35.38%
OCF growth 1Y5.37%
OCF growth 3Y10.58%
OCF growth 5Y19.02%