Financial Trading Blog
Stock of the day 15/12/2014 – Darden Restaurants Inc
After starting the year strongly, ending the 1st January at $54.39, the restaurant operator spent much of the year trying to get back up to these prices. The first half of the year saw share prices in the company fluctuate between $48 and $50, before hitting its yearly low of $43.93 in mid-July. This was around the time that investment advisor Standard Value sued Darden for access to confidential files pertaining to the sale of Red Lobster to Golden Gate Capital, which was completed in late July.
Following this period, Standard Value has taken control of the Darden boardroom, with all 12 of the advisor’s director nominees being elected. Standard Value has been very critical of the Red Lobster deal, the sale of which may be felt in this quarter’s release. This then also saw the announced retirement of CFO Brad Richmond, and the trimming of management in order to save $20 million.
Darden’s chains, like Olive Garden and Longhorn Steakhouse have been struggling in the face of a generation that is beginning to seek healthier casual dining experiences, with Olive Garden in particular shedding same-restaurant sales in the last quarter. Despite these issues, Darden’s top shares price pf 2014 occurred last week at $58.90, are earnings per share are expected to jump 80% to $0.27.
However, this earnings jump is forecast to be joined by a 23% fall in revenue to $1.55 billion, leading to a mixed reaction from analysts. Miller Tabak and KeyCorp have shares in Darden at a ‘buy’, whilst Zacks did raise the stock’s rating, but only from ‘underperform’ to ‘neutral’. Darden will be seeking to ride out this internally volatile period for the company, and hope that its behind-the-scenes drama won’t have too much of an effect on its numbers.
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