In a new SEC filing on September 26, it was revealed that W, SVP at Darden Restaurants DRI, executed a significant exercise of company stock options.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission on Thursday showed that W, SVP at Darden Restaurants, a company in the Consumer Discretionary sector, just exercised stock options worth 4,735 shares of DRI stock with an exercise price of $107.05.

Darden Restaurants shares are currently trading up by 0.07%, with a current price of $168.06 as of Friday morning. This brings the total value of W’s 4,735 shares to $288,882.

Get to Know Darden Restaurants Better

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.

Key Indicators: Darden Restaurants’s Financial Health

Decline in Revenue: Over the 3 months period, Darden Restaurants faced challenges, resulting in a decline of approximately -6.77% in revenue growth as of 31 August, 2024. This signifies a reduction in the company’s top-line earnings. When compared to others in the Consumer Discretionary sector, the company faces challenges, achieving a growth rate lower than the average among peers.

Key Profitability Indicators:

• Gross Margin: The company issues a cost efficiency warning with a low gross margin of 20.41%, indicating potential difficulties in maintaining profitability compared to its peers.

• Earnings per Share (EPS): Darden Restaurants’s EPS outshines the industry average, indicating a strong bottom-line trend with a current EPS of 1.75.

Debt Management: With a below-average debt-to-equity ratio of 2.48, Darden Restaurants adopts a prudent financial strategy, indicating a balanced approach to debt management.

Financial Valuation Breakdown:

• Price to Earnings (P/E) Ratio: The current P/E ratio of 19.37 is below industry norms, indicating potential undervaluation and presenting an investment opportunity.

• Price to Sales (P/S) Ratio: With a P/S ratio of 1.77 below industry standards, the stock shows potential undervaluation, making it an appealing investment option for those focusing on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With a lower-than-industry-average EV/EBITDA ratio of 13.87, Darden Restaurants presents a potential value opportunity, as investors are paying less for each unit of EBITDA.

Market Capitalization Highlights: Above the industry average, the company’s market capitalization signifies a significant scale, indicating strong confidence and market prominence.

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Why Insider Transactions Are Key in Investment Decisions

Insider transactions serve as a piece of the puzzle in investment decisions, rather than the entire picture.

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.

Transaction Codes To Focus On

When it comes to transactions, investors tend to focus on those in the open market, detailed in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S indicates 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.