Tags: Darden | dividend | growth | DRI

Darden’s Dividend: Growth Ahead?

By    |   Monday, 07 Nov 2011 01:05 PM

Darden Restaurants (DRI) owns several chains of well-known casual dining restaurants. The company has produced rapid rates of revenue, earnings and dividend growth over the last several years despite the economic slowdown. Investors must decide if the growth rate is slowing or there is more to come.

Darden Restaurants is the world's largest company-owned and operated restaurant management company. Darden owns approximately 1,900 restaurants under the Olive Garden, Red Lobster and Longhorn Steakhouse brands, plus a group of specialty restaurants. The company also has approximately 35 restaurants in Canada.

The company's fiscal year closes out at the end of May. For fiscal years 2007 through 2011, total revenues increased to $7.5 billion from $5.57 billion in 2007. Net income per share more than doubled, to $3.39 from $1.35.

In the same period, the annual dividend almost tripled to $1.28 from 46 cents annually. During the four year period, the number of company owned restaurants increased by 570 to 1,895.

Growth slows

For the first quarter of 2012, Darden Restaurants reported revenues of $1.94 billion, up 7.5 percent from $1.81 billion a year earlier. Net income of 78 cents per share was down from 80 cents.

The lower net income was due to higher commodity costs, flat same-store sales results from Olive Garden and the effects of Hurricane Irene. For the full year, company management has issued guidance of same-store sales growth of 3 percent, the addition of 80 to 90 new stores and total revenue growth of 6.5 to 7.5 percent. Net income is forecast to increase about 10 percent to $3.78 per share.

In recent analyst comments, Citigroup analyst Alvin Concepcion stated that he believes the market has turned too negative on the casual dining stocks, reiterating a buy rating and increasing his target price by $5 per share.

The company reports next on Dec. 20.

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Darden Restaurants (DRI) owns several chains of well-known casual dining restaurants. The company has produced rapid rates of revenue, earnings and dividend growth over the last several years despite the economic slowdown. Investors must decide if the growth rate is slowing...
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2011-05-07
Monday, 07 Nov 2011 01:05 PM
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