Darden Restaurants, Inc. (DRI) – Bear of the DayDarden Restaurants, Inc. (DRI) boasts a unique position driven by its strong value proposition, menu improvements, excellent unit-level execution with differentiated brands and a balanced portfolio, which provides stronger diversification in sales and cost synergies. Favorable food and energy costs will also support Darden in 2013.
However, the company is not altogether immune to the challenges. The recent woes at one of its core brands, Olive Garden, continue to nag the company. Stiff competition resulting in higher discounting rates, failure of some promotional offers, probability of higher 2013 SG&A expenses as well as cautious consumer spending will add further woes to the worry.
Most importantly, Darden recently slashed its earnings per share guidance for 2013 to reflect the dilutive effect of the latest Yard House acquisition. Hence, we downgrade the stock from a Neutral to Underperform recommendation.
DARDEN RESTRNT (DRI): Free Stock Analysis Report
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