Martin Melvin John, President at Darden Restaurants DRI, reported an insider sell on September 30, according to a new SEC filing.

What Happened: John’s decision to sell 2,000 shares of Darden Restaurants was revealed in a Form 4 filing with the U.S. Securities and Exchange Commission on Monday. The total value of the sale is $334,452.

Monitoring the market, Darden Restaurants‘s shares up by 0.15% at $164.37 during Tuesday’s morning.

Unveiling the Story Behind 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.

Breaking Down Darden Restaurants’s Financial Performance

Revenue Growth: Darden Restaurants’s remarkable performance in 3 months is evident. As of 31 August, 2024, the company achieved an impressive revenue growth rate of 0.97%. This signifies a substantial increase in the company’s top-line earnings. In comparison to its industry peers, the company trails behind with a growth rate lower than the average among peers in the Consumer Discretionary sector.

Profitability Metrics: Unlocking Value

• Gross Margin: The company faces challenges with a low gross margin of 20.41%, suggesting potential difficulties in cost control and profitability compared to its peers.

• Earnings per Share (EPS): Darden Restaurants’s EPS is significantly higher than the industry average. The company demonstrates a robust bottom-line performance 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.

Market Valuation:

• Price to Earnings (P/E) Ratio: The current P/E ratio of 18.93 is below industry norms, indicating potential undervaluation and presenting an investment opportunity.

• Price to Sales (P/S) Ratio: The current P/S ratio of 1.73 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): Indicated by a lower-than-industry-average EV/EBITDA ratio of 13.53, the company suggests a potential undervaluation, which might be advantageous for value-focused investors.

Market Capitalization Analysis: The company’s market capitalization surpasses industry averages, showcasing a dominant size relative to peers and suggesting a strong market position.

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Exploring the Significance of Insider Trading

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.

From a legal standpoint, the term “insider” pertains to any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities as outlined in Section 12 of the Securities Exchange Act of 1934. This encompasses executives in the c-suite and significant hedge funds. These insiders are mandated to inform the public of their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

A company insider’s new purchase is a indicator of their positive anticipation for a rise in the stock.

While insider sells may not necessarily reflect a bearish view and can be motivated by various factors.

Cracking Transaction Codes

For investors, a primary focus lies on transactions occurring in the open market, as indicated in Table I of the Form 4 filing. A P in Box 3 denotes 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.