Darden Restaurants in the first quarter of fiscal 2022 increased its net profit more than sixfold and raised its annual forecast. Revenue increased to $ 2.306 billion from $ 1.527 billion a year earlier. Net income for the quarter ended Aug. 29 was $ 230.9 million, or $ 1.75 per share, compared to $ 36.1 million, or $ 0.28 per share, in the comparable period last year. Market consensus predicted earnings of $ 1.64 per share on revenues of $ 2.24 billion. Darden Restaurants will pay out $ 1.1 per share in dividends, as it did a quarter earlier. The register of shareholders will close on October 8, payments will begin on November 1.
LFL restaurant sales jumped 47.5% last quarter, including Olive Garden 37.1% and LongHorn 47% higher than market expectations of 44.3%. Based on the results of the entire 2022 fiscal year, the company plans to receive revenue in the range of $ 9.4-9.6 billion (previously expected $ 9.2-9.5 billion), increase LFL sales by 27-30% (against the previous estimate of 25-29% ). Earnings per share are expected to be in the region of $ 7.25-7.6 (previously $ 7-7.5). The market forecast estimates these indicators on average at $ 9.408 billion, 30.2% and $ 7.6 per share.
We believe that FY2022 results may exceed management’s expectations as the lockdown period draws to a close and restaurant demand has been growing steadily since the beginning of the year. Darden is not like other restaurant chains: it has a leading position in the market, so the company’s business will recover faster than its competitors. In our opinion, Darden is the best bet in the American restaurant business. The company maintains a high reputation, has strong management, and also pursues an active marketing policy and develops digital technologies. We are raising our target valuation for the company’s stock from $ 164 to $ 175.
Darden Restaurants operates in the full-service dining industry. The company owns and operates eight concepts, which are Olive Garden, Longhorn, Season’s 52, Bahama Breeze, Yard House, Cheddar’s Scratch Kitchen, Capital Grille and Eddie V’s. The company also generates revenues from 62 franchised restaurants and a CPG business.