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

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission on Wednesday showed that Ricardo, President and CEO at Darden Restaurants, a company in the Consumer Discretionary sector, just exercised stock options worth 42,403 shares of DRI stock with an exercise price of $71.51.

The latest update on Thursday morning shows Darden Restaurants shares up by 0.45%, trading at $168.87. At this price, Ricardo’s 42,403 shares are worth $4,128,400.

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.

Darden Restaurants’s Financial Performance

Revenue Challenges: Darden Restaurants’s revenue growth over 3 months faced difficulties. As of 31 August, 2024, the company experienced a decline of approximately -6.77%. This indicates a decrease in top-line earnings. As compared to competitors, the company encountered difficulties, with a growth rate lower than the average among peers in the Consumer Discretionary sector.

Profitability Metrics:

• 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): The company excels with an EPS that surpasses the industry average. With a current EPS of 1.75, Darden Restaurants showcases strong earnings per share.

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.

In-Depth Valuation Examination:

• Price to Earnings (P/E) Ratio: The P/E ratio of 19.39 is lower than the industry average, implying a discounted valuation for Darden Restaurants’s stock.

• Price to Sales (P/S) Ratio: The Price to Sales ratio is 1.77, which is lower than the industry average. This suggests a possible undervaluation based on 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: With a profound presence, the company’s market capitalization is above industry averages. This reflects substantial size and strong market recognition.

Now trade stocks online commission free with Charles Schwab, a trusted and complete investment firm.

Unmasking the Significance of Insider Transactions

In the complex landscape of investment decisions, investors should approach insider transactions as part of a comprehensive analysis, considering various elements.

In legal terms, an “insider” refers to any officer, director, or beneficial owner of more than ten percent of a company’s equity securities registered under Section 12 of the Securities Exchange Act of 1934. This can include executives in the c-suite and large hedge funds. These insiders are required to let the public know of their transactions via a Form 4 filing, which must be filed within two business days of the transaction.

When a company insider makes a new purchase, that is an indication that they expect the stock to rise.

Insider sells, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.

Important Transaction Codes

Digging into the details of stock transactions, investors frequently turn their attention to those taking place in the open market, as 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.

Insider Buying Alert: Profit from C-Suite Moves

Benzinga Edge reveals every insider trade in real-time. Don’t miss the next big stock move driven by insider confidence. Unlock this ultimate sentiment indicator now. Click here for access.

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