Olive Garden parent company Darden Restaurants Inc. (DRI, Financial) reported better-than-expected fourth-quarter and full-year 2018 results on Thursday, sending shares up more than 10% in premarket trading.
The Orlando-based restaurant group, which also owns seven other brands, posted adjusted earnings per share of $1.39, topping Wall Street’s estimates of $1.35.
Quarterly revenue grew 10.3% from the prior-year quarter to $2.13 billion, beating expectations of $2.12 billion.
For the year, the company posted adjusted earnings of $4.81 per share on $8.08 billion in revenue.
Darden attributed its strong quarterly performance to positive same-store sales growth from seven of its eight restaurant brands. Same-store sales at both Olive Garden and LongHorn Steakhouse rose 2.4%, while Eddie V’s saw 3.6% growth and The Capital Grille recorded a 2.6% increase. Yard House, Seasons 52 and Bahama Breeze saw smaller increases.
In contrast, Cheddar’s Scratch Kitchen, which Darden acquired last year, saw same-store sales fall 4.7% for the quarter.
Total same-store sales were up 2.2% for the quarter and 2.3% for the year.
In a statement, CEO Gene Lee lauded the company’s performance, saying it “executed [its] back-to-basics operating philosophy” and reinforced its competitive advantages.
"Our strategy remains unchanged, and our operators' consistent focus on being brilliant with the basics has allowed us to continue building guest loyalty while taking market share," he said.
Looking ahead to 2019, the company said it expects same-store sales growth of 1% to 2% for the year and total revenue growth between 4% and 5%. It plans to open 45 to 50 new stores.
Darden also announced its board of directors increased the dividend by 19% to 75 cents per share and authorized a new $500 million share repurchase program.
According to Chief Financial Officer Rick Cardenas, the company returned $550 million to shareholders in 2018 through dividends and share buybacks.
"Our strong operating model generates substantial cash flows, which enables us to invest in our businesses and continue our history of returning significant cash to our shareholders," he said.
With a market cap of $12.7 billion, Darden’s shares were trading around $102.41 on Thursday morning with a price-earnings ratio of 23.76, a price-book ratio of 5.96 and a price-sales ratio of 5.96. GuruFocus estimates the stock has gained 6% year to date.
Disclosure: No positions.
