June 20, 2024
Top 10 Stock Darden Restaurants Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Darden Restaurants – Top 10 Stock in S&P 500 Consumer Discretionary Index
Darden Restaurants is listed as a top 10 stock on June 20, 2024 in the market index S&P US Luxury because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 84 (top 84% performer), Obermatt assesses an overall strong buy recommendation for Darden Restaurants on June 20, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Restaurants |
| Index | Dividends USA, S&P US Luxury, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Darden Restaurants Strong Buy
| 360 METRICS | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 56 |
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| GROWTH | ||||||||
| GROWTH | 43 |
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| SAFETY | ||||||||
| SAFETY | 92 |
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| SENTIMENT | ||||||||
| SENTIMENT | 75 |
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| 360° VIEW | ||||||||
| 360° VIEW | 84 |
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ANALYSIS: With an Obermatt 360° View of 84 (better than 84% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Darden Restaurants are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Darden Restaurants. The consolidated Value Rank has an attractive rank of 56, which means that the share price of Darden Restaurants is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 56% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 92. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 75. But the consolidated Growth Rank has a low rank of 43, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 57 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 84, Darden Restaurants is better positioned than 84% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 56), secure financing practices (Safety Rank of 92), and positive market sentiment in the professional investor community (Sentiment Rank of 75). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 43), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Darden Restaurants is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Darden Restaurants very positive
ANALYSIS: With an Obermatt Sentiment Rank of 75 (better than 75% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Darden Restaurants is very positive. The Sentiment Rank is based on consolidating four sentiment indicators where all but one are above average for Darden Restaurants. Analyst Opinions are at a rank of 66 (better than 66% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. The Professional Investors rank is also good at 69, which means that currently, professional investors hold more stock in this company than in 69% of alternative investment opportunities. Pros tend to favor investing in this company. In addition, Market Pulse has a rank of 62 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 62% of competitors). But Analyst Opinions Change has a below-average rank of 49, which means that stock research experts are currently changing their opinions for the worse when it comes to recommending this stock. In other words, they are getting more critical of investments in Darden Restaurants. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 75 (more positive than 75% compared with investment alternatives), Darden Restaurants has a reputation among professional investors that is significantly higher than that of its competitors. This is an early sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it might just materialize in the future. ...read more
Value Strategy: Darden Restaurants Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 56 (better than 56% compared with alternatives), Darden Restaurants shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Darden Restaurants. Price-to-Profit (also referred to as price-earnings, P/E) is 55 which means that the stock price compared with what market professionals expect for future profits is lower than for 55% of comparable companies, indicating a good value concerning Darden Restaurants's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 16, which means that the stock price is lower as regards to invested capital than for 16% of comparable investments. On the other hand, Price-to-Sales is less favorable than 70% of alternatives (only 30% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 12% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 56, is a buy recommendation based on Darden Restaurants's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Darden Restaurants Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 43 (better than 43% compared with alternatives), Darden Restaurants shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Darden Restaurants. Profit Growth has a rank of 60, which means that currently professionals expect the company to grow its profits more than 60% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 58 (above 58% of alternative investments). But Sales Growth has a below the median rank of 46, which means that, currently, professionals expect the company to grow less than 54% of its competitors, and Capital Growth also has a lower rank of 19. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 43, is a hold recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for Darden Restaurants. ...read more
Safety Strategy: Darden Restaurants Debt Financing Safety very solid
| SAFETY METRICS | June 20, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 70 |
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| REFINANCING | ||||||||
| REFINANCING | 50 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 96 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 92 |
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ANALYSIS: With an Obermatt Safety Rank of 92 (better than 92% compared with alternatives) for 2024, the company Darden Restaurants has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Darden Restaurants is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Darden Restaurants. Leverage is at 70, meaning the company has a below-average debt-to-equity ratio. It has less debt than 70% of its competitors. Refinancing is at a rank of 50, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 50% of its competitors. Finally, Liquidity is also good at a rank of 96, which means that the company generates more profit to service its debt than 96% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 92 (better than 92% compared with alternatives), Darden Restaurants has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Darden Restaurants Top Financial Performance
| COMBINED PERFORMANCE | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 56 |
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| GROWTH | ||||||||
| GROWTH | 43 |
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| SAFETY | ||||||||
| SAFETY | 96 |
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| COMBINED | ||||||||
| COMBINED | 84 |
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ANALYSIS: With an Obermatt Combined Rank of 84 (better than 84% compared with investment alternatives), Darden Restaurants (Restaurants, USA) shares have much better financial characteristics than comparable stocks. Shares of Darden Restaurants are a good value (attractively priced) with a consolidated Value Rank of 56 (better than 56% of alternatives), are safely financed (Safety Rank of 92, which means low debt burdens), but show below-average growth (Growth Rank of 43). ...read more
RECOMMENDATION: A Combined Rank of 84, is a strong buy recommendation based on Darden Restaurants's financial characteristics. As the company Darden Restaurants's key financial metrics exhibit good value (Obermatt Value Rank of 56) but low growth (Obermatt Growth Rank of 43) while being safely financed (Obermatt Safety Rank of 92), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 56% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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