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 the company's cost structure, which result in near-term incremental top-line revenue and margin improvements.
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 assets among a wider audience (millennials and multicultural households).
Management's commitment to dividends and share repurchases could lift longer-term shareholder returns. Read more 

Bears Say

Stagnant real wage growth trends and tighter consumer budgets 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 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 Darden's profitability, and integrating recent acquisitions could potentially exacerbate the issue. 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 U.S. casual dining industry, with $6.3 billion in annual sales. Olive Garden   Read more 

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