- Credit Suisse (SIX:CSGN) weighs in favorably on Darden Restaurants (DRI -1%) after taking in the restaurant operator's "high quality" earnings beat. Key snippets from the CS team's note are posted below.
- "It is tough to poke holes in the DRI story. SSS remain robust, margins have held up despite elevated wage inflation and the company appears on track to integrating a new brand with growth potential. However, valuation fully captures DRI's best-in-class status and growth opportunities, in our view. The stock trades at ~21x our FY18 EPS (which is closer to higher end of guidance), a ~20% premium to the stock's 5-year avg. P/E (despite a similar unit growth profile to recent years)."
- "Our $85 PT implies 19x our FY18 EPS, a more modest premium to history and peers (justified by persistent market share gains)."
- "Key risks include pick-up in competition and execution of Cheddar's synergy targets."
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