Critical Contrast: Darden Restaurants (DRI) and Del Frisco’s Restaurant Group (DFRG)

Darden Restaurants (NYSE: DRI) and Del Frisco’s Restaurant Group (NASDAQ:DFRG) are both retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, earnings, valuation, institutional ownership, risk, profitability and analyst recommendations.

Risk and Volatility

Darden Restaurants has a beta of 0.24, indicating that its share price is 76% less volatile than the S&P 500. Comparatively, Del Frisco’s Restaurant Group has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Profitability

This table compares Darden Restaurants and Del Frisco’s Restaurant Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Darden Restaurants 6.60% 26.06% 10.47%
Del Frisco’s Restaurant Group 3.73% 7.39% 4.77%

Insider and Institutional Ownership

89.9% of Darden Restaurants shares are held by institutional investors. Comparatively, 99.2% of Del Frisco’s Restaurant Group shares are held by institutional investors. 0.6% of Darden Restaurants shares are held by company insiders. Comparatively, 2.4% of Del Frisco’s Restaurant Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Darden Restaurants and Del Frisco’s Restaurant Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Darden Restaurants $7.39 billion 1.33 $975.90 million $3.87 20.47
Del Frisco’s Restaurant Group $356.76 million 0.76 $41.74 million $0.56 22.77

Darden Restaurants has higher revenue and earnings than Del Frisco’s Restaurant Group. Darden Restaurants is trading at a lower price-to-earnings ratio than Del Frisco’s Restaurant Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Darden Restaurants pays an annual dividend of $2.52 per share and has a dividend yield of 3.2%. Del Frisco’s Restaurant Group does not pay a dividend. Darden Restaurants pays out 65.1% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Darden Restaurants and Del Frisco’s Restaurant Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Darden Restaurants 1 13 10 0 2.38
Del Frisco’s Restaurant Group 0 3 2 0 2.40

Darden Restaurants presently has a consensus price target of $87.52, suggesting a potential upside of 10.50%. Del Frisco’s Restaurant Group has a consensus price target of $18.10, suggesting a potential upside of 41.96%. Given Del Frisco’s Restaurant Group’s stronger consensus rating and higher possible upside, analysts clearly believe Del Frisco’s Restaurant Group is more favorable than Darden Restaurants.

Summary

Darden Restaurants beats Del Frisco’s Restaurant Group on 9 of the 16 factors compared between the two stocks.

About Darden Restaurants

Darden Restaurants, Inc. is a full-service restaurant company. The Company owned and operated 1,536 restaurants through its subsidiaries in the United States and Canada, as of May 29, 2016. The Company’s segments include Olive Garden, LongHorn Steakhouse, Fine Dining (which includes The Capital Grille, and Eddie V’s Prime Seafood and Wildfish Seafood Grille (Eddie V’s)) and Other Business (which includes Yard House, Seasons 52, Bahama Breeze, consumer-packaged goods and franchise revenues). As of May 29, 2016, the Company also had 50 restaurants operated by independent third parties pursuant to area development and franchise agreements. Olive Garden’s menu includes a range of authentic Italian foods featuring fresh ingredients and a selection of imported Italian wines. LongHorn Steakhouse restaurants feature a range of menu items, including fresh steaks and chicken, as well as salmon, shrimp, ribs, pork chops, burgers and prime rib.

About Del Frisco’s Restaurant Group

Del Frisco’s Restaurant Group, Inc. develops, owns and operates three contemporary, complementary restaurants: Del Frisco’s Double Eagle Steak House (Del Frisco’s), Sullivan’s Steakhouse (Sullivan’s) and Del Frisco’s Grille (the Grille). As of December 27, 2016, the Company operated 53 restaurants in 24 states and the District of Columbia in the United States. The Company’s segments include Del Frisco’s, Sullivan’s and the Grille. Del Frisco’s is a steakhouse concept in the United States. The Del Frisco’s brand’s menu includes the United States Department of Agriculture (USDA) Prime grade, wet-aged steaks hand-cut at the time of order and a range of other offerings, including prime lamb, fresh seafood, and signature side dishes and desserts. Each restaurant has a sommelier to guide diners through a wine list. As of December 27, 2016, the Company operated 12 Del Frisco’s steakhouses in nine states and the District of Columbia. Sullivan’s is a complementary concept to Del Frisco’s.

Receive News & Ratings for Darden Restaurants Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Darden Restaurants Inc. and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply