Shares of restaurant operator Darden Restaurants (NYSE:DRI) are down in today’s trading as investors await its Q4 earnings results on June 20 before the market opens. Analysts are expecting earnings per share to come in at $2.61 on revenue of $2.972 billion. This equates to 1.16% and 7.4% year-over-year increases, respectively, according to TipRanks’ data.
Ideally, earnings per share should grow faster than revenue as this demonstrates a high degree of operating and financial leverage in the business. Nevertheless, it’s worth noting that DRI has beaten EPS forecasts six times during the past eight quarters, as demonstrated in the image below. Therefore, it’s possible that EPS growth will outpace revenue growth.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a 5.92% move in either direction.
Is DRI a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on DRI stock based on 13 Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 5% decline in its share price over the past year, the average DRI price target of $175.76 per share implies 15.66% upside potential.
