Fiscal Q1 sales from LongHorn and Fine Dining topped estimates while the company's margin performance was "impressive," the investment firm noted. RBC expects upside from Darden Restaurants' ability to address supply constraints, as well as opportunity to accelerate Olive Garden sales.
The Olive Garden parent's earnings rose to $1.75 per diluted share in the three months to Aug. 29 from $0.28 last year, compared with the Capital IQ-polled GAAP estimate of $1.64. Revenue climbed 51% annually to $2.31 billion on the back of growth across all segments, versus the consensus of $2.24 billion.
Fiscal Q1 same-store sales grew more than 47%, compared with the 44% hike predicted by analysts.
For fiscal 2022, Darden now expects EPS from continuing operations of $7.25 to $7.60 and sales of $9.4 billion to $9.6 billion. The company previously projected a $7 to $7.50 EPS range and revenue of $9.2 billion to $9.5 billion.
RBC lifted its price target to $176 from $165. It also increased the company's fiscal 2022 EPS estimate to $7.54 from $7.38 and the revenue outlook to $9.58 billion from $9.46 billion.
Price: 158.57, Change: -0.93, Percent Change: -0.58
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