DARDEN RESTAURANTS INC (DRI) Stock Fundamental Analysis
NYSE:DRI - New York Stock Exchange, Inc. - US2371941053 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to DRI. DRI was compared to 132 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 has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
DRI had positive earnings in the past year.
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
DRI has a Return On Assets of 8.34%. This is in the better half of the industry: DRI outperforms 79.55% of its industry peers.
DRI has a Return On Equity of 45.41%. This is amongst the best in the industry. DRI outperforms 91.67% of its industry peers.
DRI has a better Return On Invested Capital (12.03%) than 77.27% of its industry peers.
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 better Profit Margin (8.69%) than 68.94% of its industry peers.
In the last couple of years the Profit Margin of DRI has declined.
DRI's Operating Margin of 11.69% is fine compared to the rest of the industry. DRI outperforms 61.36% of its industry peers.
DRI's Operating Margin has improved in the last couple of years.
DRI has a Gross Margin of 21.75%. This is amonst the worse of the industry: DRI underperforms 84.85% of its industry peers.
DRI's Gross Margin has improved in the last couple of years.
| 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
DRI has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
DRI has less shares outstanding than it did 1 year ago.
The number of shares outstanding for DRI has been reduced compared to 5 years ago.
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.
Looking at the Altman-Z score, with a value of 2.63, DRI is in the better half of the industry, outperforming 68.94% of the companies in the same industry.
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.
DRI has a Debt to FCF ratio of 2.06. This is amongst the best in the industry. DRI outperforms 84.09% of its industry peers.
DRI has a Debt/Equity ratio of 0.92. This is a neutral value indicating DRI is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.92, DRI is in line with its industry, outperforming 59.85% of the companies in the same industry.
Even though the debt/equity ratio score it not favorable for DRI, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.92 | ||
| Debt/FCF | 2.06 | ||
| Altman-Z | 2.63 |
ROIC/WACC1.3
WACC9.23%
2.3 Liquidity
DRI has a Current 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.
DRI has a worse Current ratio (0.42) than 81.06% of its industry peers.
A Quick Ratio of 0.28 indicates that DRI may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.28, DRI is doing worse than 87.12% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.42 | ||
| Quick Ratio | 0.28 |
3. Growth
3.1 Past
DRI shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.54%.
Measured over the past years, DRI shows a very strong growth in Earnings Per Share. The EPS has been growing by 24.78% on average per year.
Looking at the last year, DRI shows a small growth in Revenue. The Revenue has grown by 6.03% in the last year.
Measured over the past years, DRI shows a quite strong growth in Revenue. The Revenue has been growing by 9.12% on average per year.
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
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 21.62, the valuation of DRI can be described as rather expensive.
68.94% of the companies in the same industry are more expensive than DRI, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 27.19, DRI is valued a bit cheaper.
Based on the Price/Forward Earnings ratio of 19.15, the valuation of DRI can be described as rather expensive.
Based on the Price/Forward Earnings ratio, DRI is valued a bit cheaper than the industry average as 61.36% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 35.33, DRI is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.62 | ||
| Fwd PE | 19.15 |
4.2 Price Multiples
DRI's Enterprise Value to EBITDA ratio is in line with the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of DRI indicates a somewhat cheap valuation: DRI is cheaper than 71.21% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.45 | ||
| EV/EBITDA | 13.7 |
4.3 Compensation for Growth
DRI's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of DRI may justify a higher PE ratio.
PEG (NY)1.67
PEG (5Y)0.87
EPS Next 2Y10.03%
EPS Next 3Y9.74%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.68%, DRI has a reasonable but not impressive dividend return.
DRI's Dividend Yield is rather good when compared to the industry average which is at 3.47. DRI pays more dividend than 84.85% of the companies in the same industry.
DRI's Dividend Yield is comparable with the S&P500 average which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.68% |
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.
The dividend of DRI decreased 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.
The dividend of DRI is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP62.74%
EPS Next 2Y10.03%
EPS Next 3Y9.74%
206.71
-2.77 (-1.32%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners86.92%
Inst Owner Change0%
Ins Owners0.24%
Ins Owner Change-3.75%
Market Cap24.19B
Analysts77.14
Price Target228.33 (10.46%)
Short Float %3.84%
Short Ratio2.79
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.68% |
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)6.46%
PT rev (3m)6.41%
EPS NQ rev (1m)1.17%
EPS NQ rev (3m)0.69%
EPS NY rev (1m)-0.34%
EPS NY rev (3m)-0.44%
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 | 21.62 | ||
| Fwd PE | 19.15 | ||
| P/S | 2 | ||
| P/FCF | 23.45 | ||
| P/OCF | 14.24 | ||
| P/B | 10.47 | ||
| P/tB | N/A | ||
| EV/EBITDA | 13.7 |
EPS(TTM)9.56
EY4.62%
EPS(NY)10.8
Fwd EY5.22%
FCF(TTM)8.81
FCFY4.26%
OCF(TTM)14.51
OCFY7.02%
SpS103.19
BVpS19.75
TBVpS-5.93
PEG (NY)1.67
PEG (5Y)0.87
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
WACC9.23%
ROIC/WACC1.3
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%