Darden Restaurants (NYSE:DRI) is the holding company for Olive Garden and other restaurants. Olive Garden is looking like it’s going to be recovering from its stock slump. As reported by many analysts before, Olive Garden has missed same-store sales projections, and Darden’s stock got beaten up as a result. That’s how responsive the market is to missed analyst expectations and consensus calls.The good news is that you can use this hyperactive market punishment to your advantage. Certain sectors get hammered hard and otherwise solid companies get hammered hard by this phenomenon as well. Darden Restaurants is one such company.
Well, it appears that Darden Restaurants’ efforts at turning around Olive Garden’s fortunes have gained traction. In recent quarterly filings, Darden reports that Olive Garden’s same-store sales have grown for the second straight quarter. Moreover, it raised its outlook for this fiscal year. Not surprisingly, Darden’s stock has been going up.
If you are looking for a restaurant turnaround play, look into Darden Restaurants. Many analysts, including Stern Agee’s Lynne Collier have increased their price target for Darden Restaurants. If you want to bet on a company that is on the rebound, you might want to look into Darden Restaurants. Of course, you need to look at the whole industry. Maybe there are better plays out there.
Regardless, it seems that Darden has figured out a way to come to its recent slump. I wish McDonald’s would also stage a comeback. As you probably already know, McDonald’s has been pretty much trading sideways or a little bit below the market for quite sometime now.