GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Restaurants » Darden Restaurants Inc (LTS:0I77) » Definitions » ROIC %

Darden Restaurants (LTS:0I77) ROIC % : 8.02% (As of Aug. 2024)


View and export this data going back to 2018. Start your Free Trial

What is Darden Restaurants ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Darden Restaurants's annualized return on invested capital (ROIC %) for the quarter that ended in Aug. 2024 was 8.02%.

As of today (2024-12-13), Darden Restaurants's WACC % is 7.70%. Darden Restaurants's ROIC % is 9.81% (calculated using TTM income statement data). Darden Restaurants generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Darden Restaurants ROIC % Historical Data

The historical data trend for Darden Restaurants's ROIC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Darden Restaurants ROIC % Chart

Darden Restaurants Annual Data
Trend May15 May16 May17 May18 May19 May20 May21 May22 May23 May24
ROIC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 1.68 7.15 10.11 10.22 10.43

Darden Restaurants Quarterly Data
Nov19 Feb20 May20 Aug20 Nov20 Feb21 May21 Aug21 Nov21 Feb22 May22 Aug22 Nov22 Feb23 May23 Aug23 Nov23 Feb24 May24 Aug24
ROIC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 8.03 8.38 11.43 11.40 8.02

Competitive Comparison of Darden Restaurants's ROIC %

For the Restaurants subindustry, Darden Restaurants's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Darden Restaurants's ROIC % Distribution in the Restaurants Industry

For the Restaurants industry and Consumer Cyclical sector, Darden Restaurants's ROIC % distribution charts can be found below:

* The bar in red indicates where Darden Restaurants's ROIC % falls into.



Darden Restaurants ROIC % Calculation

Darden Restaurants's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in May. 2024 is calculated as:

ROIC % (A: May. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: May. 2023 ) + Invested Capital (A: May. 2024 ))/ count )
=1326.6 * ( 1 - 12.34% )/( (10395.5 + 11901.6)/ 2 )
=1162.89756/11148.55
=10.43 %

where

Darden Restaurants's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Aug. 2024 is calculated as:

ROIC % (Q: Aug. 2024 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: May. 2024 ) + Invested Capital (Q: Aug. 2024 ))/ count )
=1080.8 * ( 1 - 10.56% )/( (11901.6 + 12215.3)/ 2 )
=966.66752/12058.45
=8.02 %

where

Note: The Operating Income data used here is four times the quarterly (Aug. 2024) data.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Darden Restaurants  (LTS:0I77) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROIC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Darden Restaurants's WACC % is 7.70%. Darden Restaurants's ROIC % is 9.81% (calculated using TTM income statement data). Darden Restaurants generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases. Darden Restaurants earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.


Darden Restaurants ROIC % Related Terms

Thank you for viewing the detailed overview of Darden Restaurants's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.


Darden Restaurants Business Description

Traded in Other Exchanges
Address
1000 Darden Center Drive, Orlando, FL, USA, 32837
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 Headlines

No Headlines