Day: October 9, 2024

Martin Melvin John, President at Darden Restaurants DRI, reported an insider sell on October 8, according to a new SEC filing.

What Happened: A Form 4 filing with the U.S. Securities and Exchange Commission on Tuesday outlined that John executed a sale of 3,000 shares of Darden Restaurants with a total value of $489,894.

In the Tuesday’s morning session, Darden Restaurants‘s shares are currently trading at $159.83, experiencing a up of 0.18%.

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.

Darden Restaurants: A Financial Overview

Revenue Growth: Darden Restaurants’s revenue growth over a period of 3 months has been noteworthy. As of 31 August, 2024, the company achieved a revenue growth rate of approximately 0.97%. This indicates a substantial increase 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.

Profitability Metrics: Unlocking Value

• Gross Margin: The company shows a low gross margin of 20.41%, indicating concerns regarding cost management and overall profitability relative to its industry counterparts.

• 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.

Evaluating Valuation:

• Price to Earnings (P/E) Ratio: The Price to Earnings ratio of 18.4 is lower than the industry average, indicating potential undervaluation for the stock.

• Price to Sales (P/S) Ratio: With a lower-than-average P/S ratio of 1.68, the stock presents an attractive valuation, potentially signaling a buying opportunity for investors interested in sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With an EV/EBITDA ratio lower than industry averages at 13.23, Darden Restaurants could be considered undervalued.

Market Capitalization Analysis: Above industry benchmarks, the company’s market capitalization emphasizes a noteworthy size, indicative of a strong market presence.

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Understanding the Significance of Insider Transactions

Investors should view insider transactions as part of a multifaceted analysis and not rely solely on them for decision-making.

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

Pointing towards optimism, a company insider’s new purchase signals their positive anticipation for the stock to rise.

Nevertheless, insider sells may not necessarily indicate a bearish view and can be influenced by various factors.

Transaction Codes To Focus On

When dissecting transactions, the focal point for investors is often those occurring in the open market, meticulously detailed in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C indicates 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.