Morningstar Rating

Stock Research and Analysis

by R.J. Hottovy, CFA

Bulls Say

We remain constructive about the Starboard-led board's plans to drive increased guest counts and optimize Darden's cost structure, which should drive top-line growth and margin improvements.
We believe $1 billion in incremental revenue is possible among the SRG brands over the next five years appears feasible and could enhance Darden's brand intangible assets among a wider audience, including millennials and multicultural households.
Darden's commitment to dividends and share repurchases following its proposed real estate transactions could lift longer-term shareholder returns. Read more 

Bears Say

Tepid real wage growth trends and other cost-of-living expense headwinds continue to pressure casual dining guest counts. Many restaurants have turned to aggressive discounting to reverse this trend.
We believe casual dining industry price points relative to other segments are tougher to justify in today's environment. This paints a troubling picture regarding relative pricing power between the casual dining and fast-casual players.
We have concerns over the valuation that a stand-alone Darden REIT would fetch, and how quickly the company could diversify the asset mix of the REIT. Read more 

Management

At its annual shareholder meeting in October 2014, Darden announced that all 12 of activist investor Starboard Value's proposed directors had been elected to the board, completely replacing the company's previous board. The Starboard-led board--which   Read more 

Profile

After the sale of Red Lobster, Darden remains one of the largest players in the $80 billion-plus U.S. casual dining industry, with $6.8 billion in annual sales. Olive Garden   Read more 

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