Darden Restaurants (DRI) stock is soaring Thursday after the company announced a new partnership with Uber Technologies (UBER) for home food delivery. This is helping offset the Olive Garden parent's top- and bottom-line miss for its fiscal first quarter.
In the three months ended August 25, Darden's revenue increased 1% year-over-year to $2.76 billion, driven by the addition of 42 net new restaurants. This helped offset a 1.1% decline in same-restaurant sales. Its earnings per share (EPS) were down 1.7% from the year-ago period to $1.75.
"We operate in a very dynamic, competitive industry and we have proven we can successfully navigate challenging environments due to our strategy," said Darden CEO Rick Cardenas in a statement. "While we fell short of our expectations for the first quarter, I firmly believe in the strength of our business. I am confident in the actions all our brand teams are taking to address their guests' needs, which do not compromise the long-term health of our business for short-term benefits."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results also fell short of analysts' expectations. Wall Street was anticipating revenue of $2.8 billion and earnings of $1.83 per share, according to Yahoo Finance.
Even though its first-quarter earnings came in below estimates, Darden reiterated its full-year outlook, which calls for earnings per share in the range of $9.40 to $9.60.
"The significant step down in traffic during July, led to our first-quarter earnings being lower than expected," said Darden Chief Financial Officer Raj Vennam. "Following the softness in July, our sales trend has continued to improve. Considering this recovery as well as the planned initiatives to support the remainder of the fiscal year, we are reiterating our guidance for fiscal 2025."
Darden teams up with Uber
In a separate press release, Darden announced a new partnership with Uber for home food delivery. The collaboration will begin with select Olive Garden locations in late 2024 and will expand nationwide by May 2025.
"Guests have been asking us for home delivery options and they continue to show they are willing to pay for the convenience," Cardenas said. “As we continued to evaluate delivery, it was important for us to find a way to address this guest need state without disrupting the team member or guest experience and without compromising our competitive advantages and simple operating model."
The executive added that it believes Uber is a partner that shares the same vision and can meet the company's expectations. Darden did not indicate if or when its other brands would join the program.
Is DRI stock a buy, sell or hold?
Heading into today's session, Darden Restaurants was flat for the year to date on a total return basis (price change plus dividends). Yet, Wall Street remains bullish on the consumer discretionary stock.
According to S&P Global Market Intelligence, the consensus recommendation among the analysts following the stock that it tracks is a Buy. Meanwhile, the average price target of $170.18 represents a slight discount to where the stock is trading after Thursday's surge.
Financial services firm Oppenheimer is one of those with an Outperform rating (equivalent to a Buy) on DRI, along with an above-average $182 price target.
"We continue to believe DRI represents the best-in-class investment opportunity in casual dining with its reliable earnings model, unique scale advantages, and a strong management team with an under-promise, over-deliver mentality," said Oppenheimer analyst Brian Bittner in a September 16 note.
Related Content
-
What Services Are Open During the Government Shutdown?The Kiplinger Letter As the shutdown drags on, many basic federal services will increasingly be affected.
-
From Camping to Boating: Here's How to Stay Connected Off-GridThere's nothing quite like the peace of off-road adventures. However, ensure you have a stable connection in case you need it.
-
What the Rich Know About Investing That You Don'tPeople like Warren Buffet become people like Warren Buffet by following basic rules and being disciplined. Here's how to accumulate real wealth.
-
Ten Ways Family Offices Can Build Resilience in a Volatile WorldFamily offices are shifting their global investment priorities and goals in the face of uncertainty, volatile markets and the influence of younger generations.
-
3M, GM, Blue Chips Lead to the Upside: Stock Market TodayThe S&P 500 followed the Dow Jones Industrial Average into green territory, but the Nasdaq lagged the other indexes because of its tech exposure.
-
Should Your Brokerage Firm Be Your Bookie? A Financial Professional Weighs InSome brokerage firms are promoting 'event contracts,' which are essentially yes-or-no wagers, blurring the lines between investing and gambling.
-
Supermarkets Have Become a Pickpockets' Paradise: How to Avoid Falling VictimSome stores regularly rearrange inventory with the aim of increasing purchases, and they're creating opportunities for thieves to steal from customers.
-
Dow Adds 516 Points on Broad Optimism: Stock Market TodayEasing trade war tensions and promise from early earnings reports has investors looking on the bright side to start the week.
-
I'm a Wealth Adviser: These Are the Pros and Cons of Alternative Investments in Workplace Retirement AccountsWhile alternatives offer diversification and higher potential returns, including them in your workplace retirement plan would require careful consideration.
-
I'm a Financial Planner: If You're Within 10 Years of Retiring, Do This TodayDon't want to run out of money in retirement? You need a retirement plan that accounts for income, market risk, taxes and more. Don't regret putting it off.
