Darden Restaurants (DRI) stock was among the top five performing stocks on the NYSE on Thursday following the company’s earnings report.
Shares of the operator of restaurants like Olive Garden, Longhorn Steakhouse and Ruth’s Chris Steak House posted better than expected operating results.
The results suggest that consumers are still more comfortable dining out amid high prices at the grocery.
Notable activity from the report showed that the company’s Olive Garden chain moved back into positive comparable quarterly growth after the previous three quarters of negative results. Darden management initiated several promotional programs earlier in the year to reengage Olive Garden faithful to such as the “Endless Pasta Bowl”. Those efforts are now paying off.
The company also touted positive results from its partnership with Uber. Last quarter the company launched a program with Uber at 100 of its Olive Garden restaurants.
Revenue from operations were slightly better than the company’s target, reflecting a growth over last year of 6%. The resulting earnings per share beat analyst expectations by $0.01 at $2.03 per share.
Investors are reacting to the positive results by rallying the stock to new all-time highs at $185. The move represents a solid turnaround in the stock price after Darden shares threatened to move into a long-term bear market trend earlier in 2024.
The stock’s weak performance in early 2024 was caused by an inflation “hangover” effect as many consumers were still cautious about household spending. Lower interest rates and improving economic data have improved consumer confidence, helping to boost Darden’s operations.
Today’s 15% rally is likely to attract the attention of Wall Street analysts. The group currently has an average price target of $180 for Darden Stock. Price target upgrades are likely to occur in 2025 adding another catalyst to the price.
Investors may expect to see some short-term pullback as the stock is in overbought territory, however any weakness is likely to be met with investors looking to buy the stock on a dip.
Darden shares maintain a bullish outlook with a price target of $200.
