On Thursday, Stifel, a financial services firm, raised the price target for Darden Restaurants (NYSE:DRI) shares to $205 from the previous target of $190. The firm has maintained a Buy rating on the stock. This adjustment follows Darden's report of solid second-quarter earnings, which came in at $2.03 per share, aligning with Stifel's forecast and slightly above the consensus estimate of $2.02.
The stock, currently trading near its 52-week high with a P/E ratio of 21.1x, has shown strong momentum. InvestingPro analysis reveals the company has maintained dividend payments for 30 consecutive years, demonstrating consistent financial stability.
The earnings were propelled by better-than-expected comparable sales at Olive Garden, which saw a 2.0% increase, matching Stifel's projections and surpassing the street's expectation of 1.2%. Additionally, LongHorn Steakhouse delivered a robust performance with 7.5% in comparable sales, significantly outperforming Stifel's prediction of 4.0% and the street's forecast of 4.3%.
With a market capitalization of $21.5 billion and an impressive return on equity of 49%, Darden continues to demonstrate strong operational efficiency. Want deeper insights? InvestingPro subscribers have access to over 30 additional financial metrics and exclusive analysis.
Darden's positive momentum is attributed to successful strategies and initiatives. The analyst noted satisfaction with the company's plans to promote newly announced menu items at Olive Garden. This includes a limited-time offer set to be introduced at an attractive price point in early January. Moreover, the early signs indicate that the inclusion of Uber (NYSE:UBER) Eats as a delivery option for to-go orders could satisfy the previously untapped demand for off-premise dining occasions at Olive Garden.
In light of these developments, Stifel has revised its full-year same-restaurant sales (SRS) projection upward to 1.4%. The firm also increased its earnings per share (EPS) estimate for the fiscal year 2025 to $9.44, up from the prior estimate of $9.40.
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