Will Darden Restaurants (NYSE:DRI) current volatility spike continue?
 | By Rifka Kats | Macroaxis Story |
28% of stocks are less volatile than Darden, and above 91% of all equities are expected to generate higher returns over the next 60 days. As many old-fashioned traders are trying to avoid consumer cyclical space, it makes sense to concentrate on Darden Restaurants a little further and try to understand its current volatility patterns. We will examine why some stockholders are closely monitoring Darden Restaurants' volatility. Darden Restaurants' seemingly stabilizing volatility may still impact the value of the stock as we estimate Darden Restaurants as currently overvalued. The real value, based on our calculations, is getting close to 103.62 per share.
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Reviewed by Michael Smolkin
Darden Restaurants has roughly 654.6 M in cash with 667.1 M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 5.03. Volatility is a rate at which the price of Darden Restaurants or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Darden Restaurants may increase or decrease. In other words, similar to Darden's beta indicator, it measures the risk of Darden Restaurants and helps estimate the fluctuations that may happen in a short period of time. So if prices of Darden Restaurants fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.
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. Financial leverage can amplify the potential profits to Darden Restaurants' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Darden Restaurants' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Darden Restaurants's total debt and its cash.
Darden Restaurants Gross Profit
Darden Restaurants Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Darden Restaurants previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Darden Restaurants Gross Profit growth over the last 10 years. Please check Darden Restaurants' gross profit and other fundamental indicators for more details.
Darden Restaurants Volatility Drivers
Darden Restaurants unsystematic risk is unique to Darden Restaurants and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Darden Restaurants you can also buy Bloomin Brands. You can also mitigate this risk by investing in the consumer discretionary sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Darden Restaurants important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Darden Restaurants income statement and balance sheet. Here are more details about Darden volatility.Click cells to compare fundamentals
A Deeper Perspective
Darden Restaurants reported the last year's revenue of 7.2 B. Reported Net Loss for the year was (183.7 M) with profit before taxes, overhead, and interest of 1.41 B.
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