The Goldman Sachs Group has elevated its rating for shares of Darden Restaurants (NYSE: DRI) from neutral to buy, as detailed in a report released on Monday morning. The investment bank has set a target price of $225.00 for the restaurant operator’s stock. This upgrade reflects growing confidence in Darden’s performance and prospects in the competitive dining sector.
Analyst Ratings and Target Price Adjustments
Other financial analysts have also weighed in on Darden’s stock recently. Morgan Stanley adjusted its target price from $235.00 to $238.00 while maintaining an “overweight” rating as of September 19, 2023. Similarly, KeyCorp lowered its target from $240.00 to $225.00, retaining their “overweight” stance.
In a significant move, Citigroup raised its target price from $245.00 to $253.00 with a buy rating, while Argus adjusted its target down from $260.00 to $220.00, yet still maintained a buy rating. Overall, twenty analysts have issued buy ratings for Darden, while nine have recommended holding the stock. According to MarketBeat, Darden currently holds a consensus rating of “Moderate Buy” with a target price averaging $227.15.
Stock Performance and Financial Highlights
On Monday, September 18, 2023, shares of Darden Restaurants opened at $187.90. The company has experienced a 52-week low of $157.89 and a high of $228.27. Its 50-day moving average stands at $199.34, while the 200-day moving average is $204.87.
Darden’s financial health remains robust, with a market capitalization of $21.85 billion, a price-to-earnings (P/E) ratio of 20.14, and a P/E/G ratio of 1.72. The company reported its earnings on September 18, revealing earnings per share (EPS) of $1.97 for the quarter, which fell short of analysts’ expectations of $2.01 by $0.04. Nonetheless, Darden’s revenue for the quarter reached $3.04 billion, slightly exceeding forecasts of $3.03 billion, reflecting a year-over-year revenue increase of 10.4%.
Looking ahead, Darden has set its guidance for fiscal year 2026 between $10.50 and $10.70 EPS, while analysts project that the company will achieve $9.52 EPS for the current fiscal year.
Dividend Announcement and Insider Activity
In related news, Darden recently announced a quarterly dividend of $1.50 per share, scheduled for payment on November 3, 2023. Investors on record as of October 10, 2023 will receive this dividend, which represents an annualized dividend of $6.00 and a yield of 3.2%. The company’s dividend payout ratio is recorded at 64.31%.
In terms of insider trading, Senior Vice President Matthew R. Broad sold 5,661 shares on October 6, 2023 for a total of approximately $1,094,837.40, resulting in a 28.92% decrease in his ownership. Another insider, Laura B. Williamson, sold 1,157 shares on July 30, 2023 at an average price of $204.70, totaling around $236,837.90.
Over the past three months, insiders have sold a total of 7,341 shares, amounting to roughly $1,438,707. Currently, corporate insiders hold approximately 0.49% of the stock.
Institutional Investor Activity
Institutional investments in Darden have seen notable changes. GAMMA Investing LLC increased its stake by 124.2%, now holding 4,471 shares valued at $929,000. Wealth Enhancement Advisory Services LLC expanded its position by 31.8%, owning 15,230 shares worth $3,164,000.
Other institutional players, including ORG Partners LLC and Cambridge Investment Research Advisors Inc., also enhanced their holdings. Notably, hedge funds and institutional investors collectively own approximately 93.64% of Darden’s stock, indicating strong institutional confidence in the company.
Darden Restaurants, Inc., through its subsidiaries, operates a range of full-service restaurants across the United States and Canada, including popular brands such as Olive Garden, LongHorn Steakhouse, and The Capital Grille.