Darden Story

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DRI -- USA Stock  

USD 95.33  4.20  4.22%

Darden Restaurants is scheduled to announce its earnings today. The next earnings report is expected on the 17th of December 2020. As many millenniums are trying to avoid consumer cyclical space, it makes sense to concentrate on Darden Restaurants a little further and try to understand its current market patterns. I will address a few possible reasons stockholders do not currently respect this stock.
Published over a month ago
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Will Darden (NYSE:DRI) continue to grow in October?
Darden Restaurants has 6.01 B in debt with debt to equity (D/E) ratio of 2.58, meaning that the entity heavily relies on borrowing funds for operations. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Darden Restaurants has an asset utilization ratio of 170.43 percent. This implies that the company is making $1.7 for each dollar of assets. An increasing asset utilization means that Darden Restaurants is more efficient with each dollar of assets it utilizes for everyday operations.
Darden Restaurants financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Darden Restaurants, including all of Darden Restaurants's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Darden Restaurants assets, the company is considered highly leveraged. Understanding the composition and structure of overall Darden Restaurants debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.

Understanding Darden Total Debt

Darden Restaurants liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Darden Restaurants has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Darden Restaurants balance sheet include debt obligations and money owed to different Darden Restaurants vendors, workers, and loan providers. Below is the chart of Darden main long-term debt accounts currently reported on its balance sheet.
You can use Darden Restaurants financial leverage analysis tool to get a better grip on understanding its financial position

How important is Darden Restaurants's Liquidity

Darden Restaurants financial leverage refers to using borrowed capital as a funding source to finance Darden Restaurants ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Darden Restaurants financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Darden Restaurants's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions. It is good to see analyst projects for Darden Restaurants, but it might be worth checking our own buy vs. sell analysis

Bona fide gift to Susan Connelly of 1020 shares of Darden Restaurants subject to Section 16

Legal trades by Darden Restaurants insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Darden insider trading alert for gift of common stock by Susan Connelly, SVP Chief Comm & PA Officer, on 6th of October 2020. This event was filed by Darden Restaurants Inc with SEC on 2020-10-06. Statement of changes in beneficial ownership - SEC Form 4. Susan Connelly currently serves as senior vice president chief communications and public affairs officer of Darden Restaurants [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

What is driving Darden Restaurants Investor Appetite?

The current rise in Darden Restaurants short term price appreciation could raise concerns from stockholders as the firm it trading at a share price of 90.00 on slow start in volume. The company management teams have successfully maneuvered the firm at convenient times to take advantage of all market conditions in August. The stock standard deviation of daily returns for 30 days investing horizon is currently 2.54. The current volatility is consistent with the ongoing market swings in August 2020 as well as with Darden Restaurants unsystematic, company-specific events.

Asset Breakdown

7.7 B
Assets Non Current
1.9 B
Current Assets
Total Assets8.81 Billion
Current Assets1.1 Billion
Assets Non Current7.71 Billion
Goodwill1.87 Billion
Tax Assets18.88 Million

Darden showing occurrence of lower volatility

The sortino ratio is down to 0.14 as of today. Darden Restaurants currently demonstrates below-verage downside deviation. It has Information Ratio of 0.12 and Jensen Alpha of 0.34. However, we do advice investors to further question Darden Restaurants expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Final Takeaway

While some firms under the restaurants industry are still a bit expensive, Darden Restaurants may offer a potential longer-term growth to stockholders. To conclude, as of the 24th of September 2020, we believe Darden Restaurants is currently undervalued. It almost mirrors the market and projects below average odds of financial distress in the next two years. Our up-to-date 30 days Buy-Hold-Sell recommendation on the company is Strong Buy.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Darden Restaurants. Please refer to our Terms of Use for any information regarding our disclosure principles.

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