Darden's Q2 Earnings Underperform Estimates, Revenues Top

Darden Restaurants, Inc. DRI reported second-quarter fiscal 2025 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top and bottom lines increased on a year-over-year basis.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.DRI’s Fiscal Q2 Earnings & RevenuesDuring the fiscal second quarter, Darden reported adjusted earnings per share (EPS) of $2.03, missing the Zacks Consensus Estimate of $2.05. In the prior-year quarter, DRI reported an adjusted EPS of $1.84.Total sales during the quarter came in at $2.89 billion, beating the consensus mark of $2.87 billion. Sales inched up 6% from the prior-year quarter’s level. The upside was backed by a blended same-restaurant sales increase of 2.4%. Also, contributions from 103 Chuy's restaurants and 39 net new restaurants added to the positives.Darden Restaurants, Inc. Price, Consensus and EPS Surprise Darden Restaurants, Inc. price-consensus-eps-surprise-chart | Darden Restaurants, Inc. QuoteSales by SegmentsDarden reports business under four segments — Olive Garden, LongHorn Steakhouse, Fine Dining, including The Capital Grille and Eddie V's and Other Business.During the fiscal second quarter, sales at Olive Garden increased 3.3% year over year to $1.29 billion. Our estimate for the metric was $1.3 billion. Comps in the segment increased 2% year over year against a 2.9% fall reported in the previous quarter.At LongHorn Steakhouse, sales were up 10.4% year over year to $710.1 million. Our estimate for the metric was $687.4 million. Comps in the segment rose 7.5% year over year compared with the 3.7% growth reported in the previous quarter.Sales in Fine Dining fell 3.8% year over year to $306 million. Our estimate for the metric was $328.3 million. Comps in the segment fell 5.8% year over year compared with a 6% drop reported in the previous quarter.Sales in Other Business increased 12.9% year over year to $581.4 million. Our estimate for the metric was $527.6 million. Comps in the Other Business inched up 0.7% year over year against a 1.8% fall reported in the previous quarter.DRI’s Operating HighlightsIn the fiscal second quarter, total operating costs and expenses inched up 6.1% year over year to $2.6 billion. The upside was primarily due to increased restaurant expenses, labor costs and marketing expenses. The figure compares to our projection of $2.53 billion.DRI’s Balance SheetAs of Nov. 24, 2024, cash and cash equivalents came in at $217.3 million compared with $194.8 million as of May 26.During the fiscal second quarter, inventories came in at $318 million compared with $297.7 million reported in the previous quarter. As of Nov. 24, 2024, long-term debt was $2.12 billion compared with $1.37 million as of May 26.During the fiscal second quarter, Darden’s board of directors repurchased approximately 0.9 million shares of its common stock, worth approximately $142 million. As of the fiscal second quarter, the company stated availability of approximately $601 million under the $1 billion repurchase authorization.Darden’s Fiscal 2025 OutlookFor the fiscal 2025, the company expects total sales to be approximately $12.1 billion. Same-restaurant sales growth in the fiscal 2025 is anticipated to be 1.5% year over year. Diluted EPS from continuing operations is anticipated in the band of $9.40-$9.60.The company expects to open 50-55 net new restaurants and projects a total capital spending of approximately $650 million in fiscal 2025.DRI’s Zacks Rank & Key PicksDarden currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the Zacks Retail-Wholesale sector have been discussed below.Deckers Outdoor Corporation DECK currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.DECK has a trailing four-quarter earnings surprise of 41.1%, on average. The stock has gained 19.7% in the past six months. The Zacks Consensus Estimate for DECK’s fiscal 2025 sales and EPS indicates growth of 13.6% and 12.8%, respectively, from the year-ago period’s levels.Brinker International, Inc. EAT presently flaunts a Zacks Rank of 1. EAT has a trailing four-quarter earnings surprise of 12.1%, on average. The stock has surged 87.1% in the past six months.The consensus estimate for EAT’s fiscal 2025 sales and EPS indicates growth of 8.4% and 37.6%, respectively, from the year-ago period’s levels.Sprouts Farmers Market, Inc. SFM currently sports a Zacks Rank of 1. SFM has a trailing four-quarter earnings surprise of 15.3%, on average. The stock has risen 73.9% in the past six months.The Zacks Consensus Estimate for SFM’s 2025 sales and EPS indicates a rise of 10% and 14.4%, respectively, from the year-ago period’s levels.Zacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Darden Restaurants, Inc. (DRI): Free Stock Analysis Report Brinker International, Inc. (EAT): Free Stock Analysis Report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report Sprouts Farmers Market, Inc. (SFM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks