Morningstar Rating

Stock Research and Analysis

by R.J. Hottovy, CFA

Bulls Say

The Specialty Restaurant Group's goal of $1 billion in incremental revenue over the next five years appears feasible and could enhance Darden's brand intangible asset among a wider audience (millennials and multicultural households).
We believe that Olive Garden's traffic issues are correctable through everyday affordability efforts, new menu enhancements (lunch options, takeout, and smaller plates), remodeling activity, simplified operations, and integrated advertising and promotions.
Darden's commitment to dividends and share repurchases could lift longer-term shareholder returns. Read more 

Bears Say

Stagnant employment trends and tighter consumer budgets continue to pressure casual dining guest counts. Many restaurants have turned to aggressive discounting to reverse this trend.
Management has acknowledged that the casual dining price premium relative to other segments has been tougher to justify in today's environment. This provides a troubling picture of the balance of relative pricing power between the casual dining and fast casual players.
Industry price competition has taken its toll on profitability, and integrating recent acquisitions could potentially exacerbate the issue. Read more 


In July, Darden announced that chairman and CEO Clarence Otis will be stepping down and the roles of chairman and CEO will be separated. Otis will serve as CEO until either his successor is appointed or Dec. 31, 2014, while Independent Lead Director   Read more 


After the sale of Red Lobster, Darden will remain one of the largest players in the $80 billion U.S. casual dining industry, with $6.3 billion in annual sales. Olive Garden   Read more 

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