A significant insider transaction involving the exercise of company stock options was reported on September 25, by Kiernan Daniel J, President at Darden Restaurants DRI, as per the latest SEC filing.

What Happened: Disclosed in a Form 4 filing on Wednesday with the U.S. Securities and Exchange Commission, J, President at Darden Restaurants, executed a strategic derivative sale. This involved exercising stock options for 20,665 shares of DRI, resulting in a transaction value of $2,092,159.

Currently, Darden Restaurants shares are trading up 0.45%, priced at $168.87 during Thursday’s morning. This values J’s 20,665 shares at $2,092,159.

All You Need to Know About Darden Restaurants

Darden Restaurants is the largest restaurant operator in the us full-service space, with consolidated revenue of $11.4 billion in fiscal 2024 resulting in 3%-4% full-service market share (per NRA data and our calculations). The company maintains a portfolio of 10 restaurant brands: Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Ruth’s Chris, Yard House, The Capital Grille, Seasons 52, Eddie V’s, Bahama Breeze, and The Capital Burger. Darden generates revenue almost exclusively from company-owned restaurants, though a small network of franchised restaurants and consumer-packaged goods sales through the traditional grocery channel contribute modestly. As of the end of its fiscal 2024, the company operated 2,031 restaurants in the us.

Understanding the Numbers: Darden Restaurants’s Finances

Negative Revenue Trend: Examining Darden Restaurants’s financials over 3 months reveals challenges. As of 31 August, 2024, the company experienced a decline of approximately -6.77% in revenue growth, reflecting a decrease in top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Consumer Discretionary sector.

Profitability Metrics: Unlocking Value

• Gross Margin: With a low gross margin of 20.41%, the company exhibits below-average profitability, signaling potential struggles in cost efficiency compared to its industry peers.

• Earnings per Share (EPS): Darden Restaurants’s EPS is notably higher than the industry average. The company achieved a positive bottom-line trend with a current EPS of 1.75.

Debt Management: Darden Restaurants’s debt-to-equity ratio is below the industry average. With a ratio of 2.48, the company relies less on debt financing, maintaining a healthier balance between debt and equity, which can be viewed positively by investors.

Valuation Metrics:

• Price to Earnings (P/E) Ratio: Darden Restaurants’s P/E ratio of 19.39 is below the industry average, suggesting the stock may be undervalued.

• Price to Sales (P/S) Ratio: The current P/S ratio of 1.77 is below industry norms, suggesting potential undervaluation and presenting an investment opportunity for those considering sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): Darden Restaurants’s EV/EBITDA ratio, lower than industry averages at 13.88, indicates attractively priced shares.

Market Capitalization Analysis: The company’s market capitalization is above the industry average, indicating that it is relatively larger in size compared to peers. This may suggest a higher level of investor confidence and market recognition.

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The Importance of Insider Transactions

Insider transactions shouldn’t be used primarily to make an investing decision, however an insider transaction can be an important factor in the investing decision.

In the realm of legality, an “insider” is defined as any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities under Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and major hedge funds. These insiders are required to disclose their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

Notably, when a company insider makes a new purchase, it is considered an indicator of their positive expectations for the stock.

Conversely, insider sells may not necessarily signal a bearish stance on the stock and can be motivated by various factors.

Deciphering Transaction Codes in Insider Filings

In the domain of transactions, investors frequently turn their focus to those taking place in the open market, as meticulously outlined in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Darden Restaurants’s Insider Trades.

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This article was generated by Benzinga’s automated content engine and reviewed by an editor.