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No. of Recommendations: 4
Hi Trent,

I own Darden's and it doesn't trade in a large range, but it has very often move under $50 and back above. It has been doing that since 2010. And it does it often. I don't really try to buy at the bottom or sell at the top, and the range is small, but it repeats so often it is worth playing with it some.

Today price is $45.36. It pays a $2.20 dividend currently or 4.6% yield. This has been a cheap price for them.

The sell of Red Lobster for $2.1 billion is both good and bad. It will allow them to pay off $1 billion in debt while placing another $1.1 billion in the bank. Plus Red Lobster wasn't doing well for Darden's recently. The Competition is great for seafood restaurants and Red Lobster just wasn't doing well recently.

However, Red Lobster was cash flow positive and generated over $2 billion in annual sales. Last year, they generated $2.62 billion, but that was down 1.7%.

Debt: Total debt is $2.7 billion. The sale of Red Lobster will bring that down to $1.7 billion. Interest expense last year was $125.9 million, so that will be reduced.

Cash flow:

TTM cash flow was 168.6 million or $1.26 per share. This is lower than in previous years, but even during the recession, Darden was cash flow positive. In fact, they were doing better during the recession than today. I think part of the reason is the underperforming restaurants. Red Lobster and Olive Garden have both done poorly in the past only to recover. Red Lobster was very weak, so they decided to sell them and it was a valuable property, so it allowed them to get enough money to significantly pay down debt.

They are going to focus on their smaller growth restaurants. Long-Horn Steakhouse (not so small) is still doing well for them. For the third quarter, sales were $363 million up 9.1%. Last year sales for them was $1.23 billion up 10.3%. That concept is important for them and still growing.

Their speciality Group, which includes the much smaller concepts, Capital Grille, Eddie Vs, Season 52, Bahama Breeze and now Yard House. As a group they are doing well and I think could create needed growth. The sale of Red Lobster, combined with their cash flow should allow them plenty of capital to expand these concepts.

For that reason, I like them at $45 and I believe they will move back over $50. It is an often repeated pattern. Their dividend protects them some on the downside. It costs them about $258.2 million a year, but with the money from the sale of Red Lobster and their cash flow, they should be able to continue paying it without much worry.

Real estate:
The Company also has $4.391 billion in Land, building and equipment. About 1,048 restaurants are on owned land. The sale of Red Lobster will take almost half of that real estate. Red Lobster had 500 owned locations.

There are many pieces to the Darden puzzle, but they have a number of good concepts and I believe they will move over $50 again.

Below are my historic notes from 2008 onward.

Darden Restaurants (DRI)
June 24, 2008 4Q:2008 earnings’ highlights:
** 4Q revenues were $1.826 billion up from $1.46 billion
** Fiscal 2007 revenues were $6.627 billion up from $5.567 billion
** TTM revenues were $6.627 billion or $46.28
** Diluted share count 143.2 million
** Earnings per share were $0.71 up from a loss of ($0.38)
** Fiscal 2007 revenues were $2.60 up from $1.35
** Cash $43.2 million: Debt $1.8 billion
** Diluted share count 143.2 million
** Property land buildings $3 billion
** Stores 1702 ( 680 Red Lobster: 653 Olive Garden: Longhorn Steakhouse 305: 32 The Capital Grille: 23 Bahama Breeze: 7 Seasons 52)
** Cash flow for the year $343.5 million up from $282.5 million
** TTM cash flow was $343.5 million or $2.40
** Annual dividend range $.80
** Trading range between June 24, 2008 and September 16, 2008 was $27.26 to $37.83: PE ratio range was 10.49 to 14.55: PS ratio range was .59 to .82: Cash flow yield was 6.3% to 8.8%: Dividend ratio range was 2.1% to 2.9%

September 16, 2008 1Q:2009 earnings’ highlights:
** Revenues were $1.774 billion up from $1.468 billion
** TTM revenues were $6.9 billion or $48.55
** Earnings per share $0.58 down $0.72
** TTM earnings $2.46
** Diluted share count 142.8 million
** Cash flow for the quarter $26.6 million down from $74.6 million
** TTM Cash flow was $295.5 million or $2.07
** Annual dividend $0.80
** Trading range between September 16, 2008 and was December 18, 2008 was $13.21 (November 21, 2008) to $29.21: PE ratio range was 5.7 to 11.9%: PS ratio range was .27 to 1.66: Cash flow yield was 7.1% to 15.7%: Annual dividend 2.7% to 6.1%

December 18, 2008 2Q:2009 earnings’ highlights:
** Revenues were $1.669 billion up from $1.522 billion
** TTM revenues were $7.05 billion or $50.57
** Earnings per share were $0.43 up from $0.30
** TTM earnings $2.59
** Cash flow was negative ($85.3 million) down from down from $35.1 million
** TTM cash flow was $223.1 million or $1.60
** Diluted share count 139.4 million
** Trading range between December 18, 2008 and March 17, 2009 was $23.32 to $29.98: PE ratio range was 9 to 11.58: PS ratio range was .46 to .59: Cash flow yield was 5.3% to 6.9%

March 17, 2008 3Q:2009 earnings’ highlights:
** Revenues were $1.799 billion down from $1.811 billion
** TTM revenues were $7.04 billion or $50.78
** Earnings were $0.78 down from $0.88
** TTM earnings were $2.49
** Cash flow for the nine months was $124.9 million down from $255.8 million
** TTM cash flow was $212.6 million or $1.54 per share
** Diluted share count 138.6 million
** Trading range between March 17, 2009 and June 23, 2009 was $32.25 to $41.21: PE ratio range was 12.95 to 16.55: PS ratio range was .64 to .81: Cash flow yield ratio range was 3.7% to 4.8%


June 23, 2009 4Q:2009 earnings’ highlights:
** 4Q revenues were $1.976 billion up from $1.826 billion
** Fiscal 2009 $7.22 billion up from $6.63 billion
** TTM revenues were $7.22 billion or $51.28 per share
** Earnings $0.89 up from $0.71
** TTM earnings $2.65 up from $2.60
** Diluted share count 140.8 million
** Cash $62.9 million: Debt $1.25 billion
** Restaurants 1773 (690 Red Lobster: 691 Olive Garden: 321 LongHorn Steakhouse: 37 Capital Grille: 25 Bahama Breeze: Seasons 52 8)
** Cash flow for the year $252.8 million down from $343.5 million
** TTM cash flow was $252.8 million or $1.80 per share
** Trading range between June 23, 2009 and September 29, 2009 was $30.79 to $37.31: PE Ratio range was 11.61 to $14.08: PS ratio range was .6 to .73: Cash flow yield range was 4.8% to 5.8%

September 29, 2009 1Q:2010 earnings’ highlights
** Revenues $1.734 billion down from $1.774 billion
** TTM revenues were $7.18 billion or $50.81 per share
** Earnings per share $0.67 up from $0.58
** TTM earnings were $2.74
** Diluted share count 141.3 million
** Cash $79.4 million: Debt $1.75 billion
** Cash flow was $87.6 million up from $26.6 million
** TTM cash flow was $313.8 million or $2.22
** Trading range between September 29, 2009 and December 17, 2009 was $29.94 to $34.19: PE ratio range was 10.93 to 12.48: PS ratio range was .59 to .67: Cash flow yield was 6.5% to 7.4%

December 17, 2009 2Q:2010 earnings’ highlights:
** Revenues were $1.641 billion down from $1.669 billion
** TTM revenues were $7.15 billion or $50.47
** Earnings per share $0.43 flat from $0.43
** TTM earnings were $2.74 per share
** Diluted share count 141.7 million
** Cash $56.9 million: Debt $1.74 billion
** Annual dividend $1.00
** Cash flow for six months $104.9 million up from negative ($85.3 million)
** TTM Cash flow was $443 million or $3.13 per share
** Trading range between December 17, 2009 and March 23, 2010 was $33 to $44.19: PE ratio range 12.04 to 16.13: PS ratio range was .65 to .88: Cash flow yield was 7.1% to 9.5%

March 23, 2010 3Q:2010
** Revenues were $1.874 billion up from $1.799 billion
** TTM revenues were $7.23 billion or $50.81
** Earnings per share $0.94 up from $0.78
** TTM earnings were $2.90
** Diluted share count 142.3 million
** Cash $260.3 million: debt $1.6 billion
** Cash flow for nine months $439.8 million up from $120.9 million
** TTM cash flow was $571.7 million or $4.02 per share
** Trading range between March 23, 2010 and June 23, 2010 $39.79 to $49.01: PE Ratio range was 13.72 to 16.90: PS ratio range was .78 to .97: Cash flow yield was 8.2% to 10%

June 23, 2010 4Q:2010 earnings highlights:
** 4Q revenues were $1.864 billion down from $1.976 billion
** Fiscal 2010 $7.113 billion down from $7.218 billion
** TTM revenues $7.113 billion or $49.40 per share
** 4Q earnings were $0.80 down from $0.87
** Fiscal 2010 earnings were $2.84 up from $2.65
** Diluted share count 144 million
** Cash $248.8 million: debt $1.63 billion
** Cash flow for the year $483.8 million up from $252.8 million
** TTM cash flow was $483.8 million or $3.36 per share
** Annual dividend $1.28
** Trading range between June 23, 2010 and September 21, 1010 was $37.08 to $46.19: PE ratio range was 13.06 to 16.26: PS Ratio range was .75 to .94: Cash flow yield was 7.3% to 9.1%: Dividend yield range was 2.77% to 3.45%

September 21, 2010 1Q:2011 earnings’ highlights:
** Revenues were $1.807 billion up from $1.734 billion
** TTM revenues were $7.186 billion or $50.71
** Earnings per share $0.80 up from $0.67
** TTM earnings were $2.97
** Diluted share count 141.7 million
** Cash $77.5 million: Debt $1.49 billion
** Cash flow $106 million up from $87.6 million
** TTM cash flow was $502.2 million or $3.54 per share
** Annual dividend $1.28
** Trading range between September 21, 2010 and December 20, 2010 was $42.37 to $50.84: PE ratio range was 14.27 to 17.12: PS ratio range was .84 to 1: Cash flow yield was 7% to 8.4%: Dividend yield range was 2.5% to 3%

December 20, 2010 2Q:2011 earnings’ highlights:
** Sales were $1.73 billion up from $1.641 billion
** TTM revenues were $7.275 billion or $51.52 per share
** Earnings per share $0.53 up from $0.43
** TTM earnings were $3.07
** Diluted share count 141.2 million
** Cash $52.9 million: Debt $1.652 billion
** Cash flow for six months $10.2 million down from $104.9 million
** TTM cash flow was $344.1 million or $2.44 per share
** Annual dividend $1.28
** Trading range between December 20, 2010 and March 24, 2011 was $45.07 to $50.29: PE ratio range was 14.68 to 16.38: PS ratio range was .88 to .98: Cash flow yield range was 4.9% to 5.4%: Dividend yield range was 2.84%

March 24, 2011 3Q:2011 earnings’ highlights:
** Revenues were $1.977 billion up from $1.874
** TTM revenues were $7.378 billion or $52.7 per share
** Earnings were $1.08 up from $0.94
** TTM earnings were $3.21
** Diluted share count 140 million
** Cash $89.7 million: Debt $1.47 billion
** Cash flow nine months was $278.4 million down from $439.8 million
** TTM cash flow was $322.4 million or $2.30 per share
** Trading range between March 24, 2011 and June 30, 2011 was $45.51 to $52.12: PE ratio range was 14.18 to 16.24: PS ratio range was .86 to .99: Cash flow yield range was 4.4% to 5.1%

June 30, 2011 4Q:2011 earnings’ highlights:
** 4Q revenues were $1.99 billion up from $1.864 billion
** Fiscal 2011 revenues were $7.5 billion up from $7.113 billion
** TTM revenues were $7.5 billion or $54.19 per share
** Earnings were $0.99 up from $0.80
** Fiscal 2011 earnings were $3.39 up from $2.84
** Diluted share count 138.4 million
** Cash $70.5 million: Debt $1.592 billion
** Cash flow for the year $354 million down from $471.3 million
** TTM cash flow was $354 million or $2.56 per share
** Annual dividend yield was $1.72 per share
** Trading range between June 30, 2011 and September 28, 2011 was $42.65 to $53.81: PE ratio range was 15.02 to 15.87: PS ratio range was .79 to .99: Cash flow yield range was 4% to 4.8%: Cash flow dividend yield range 3.2% to 4%

September 28, 2011 1Q:2012 earnings’ highlights:
** Revenues were $1.832 billion up from $1.726 billion
** TTM revenues were $7.6 billion or $57.10 per share
** Earnings were $0.40 down from $0.53
** TTM earnings were $3.26 per share
** Diluted share count 133.2 million
** cash $50.2 million: Debt $2.26 billion
** Cash flow for the quarter was Negative ($256 million) down from $5.9 million
** TTM cash flow was $92.1 million or $0.69 per share
** Dividend annual $1.72
** Trading range between September 28, 2011 and December 16, 2011 was $40.69 to $49.16: PE ratio range was 12.48 to 15.08: PS ratio range was .71 to .86: Cash flow yield range was 1.4% to 1.7%: Dividend yield range was 3.5% to 4.23%

December 16, 2011 2Q:2012 earnings’ highlights:
** Revenue was $1.832 billion up from $1.726 billion
** TTM Revenue was $7.71 billion or $57.85 per share
** Earnings were $0.40 down from $0.53
** TTM earnings were $3.13 per share
** Diluted share count 133.2 million
** Cash $50.2 million: debt $2.258 billion
** Cash flow for six months was negative ($258.1 million) up $5.9 million
** TTM cash flow was $90 million or $0.68
** Dividend $1.72 annually
** Trading range between December 16, 2011 and March 23, 2012 was $43.06 to $53.17: PE ratio range was 13.76 to 16.99: PS ratio range was .74 to .92: Cash flow yield range was 1.3% to 1.6%: Dividend yield range was 3.2% to 4%

March 23, 2012 3Q:2012 earnings’ highlights:
** Revenue was $2.16 billion up from $1.977 billion
** TTM revenue was $7.89 billion or $60.30 per share
** Earnings were $1.25 up from $1.08
** TTM earnings were $3.30 per share
** Diluted share count 130.9 million
** Cash $88.5 million: debt $2.094 billion
** Cash flow for nine months was $67.1 million down from $272.6 million
** TTM cash flow was $148.5 million or $1.14 per share
** Dividend $1.72
** Trading range between March 23, 2012 and July 12, 2012 was $48.39 to $53.00: PE ratio range was 14.78 to 16.06: PS ratio range was .8 to .88: Cash flow yield range was 2.2% to 2.4%: Dividend yield range was 3.3% to 3.6%

July 12, 2012 4Q:2012 earnings’ highlights:
** 4Q revenue was $2.066 billion up from $1.99 billion
** Fiscal revenue was $7.999 billion up from $7.5 billion
** TTM revenue per share was $60.78 per share
** 4Q earnings were $1.15 up from $0.99
** Fiscal 2012 earnings were $3.57 up from $3.39
** Diluted share count 131.6 million
** Cash $70.5 million: debt $2.066 billion
** Cash flow for the year was $122.5 million down from $347 million
** TTM cash flow per share was $0.93
** Total stores 1994
** Trading range between July 12, 2012 and September 21, 2012 was $48.78 to $57.93: PE ratio range 13.66 to 16.23: PS ratio range was 0.80 to 0.94: cash flow yield range was 1.6% to 1.9%

September 21, 2012 1Q:2013 earnings’ highlights:
** Revenue was $2.035 billion up from $1.942 billion
** TTM revenue was $8.092 billion or $61.77 per share
** Earnings were $0.85 up from $0.78
** TTM earnings were $3.64 per share
** Diluted share count 131 million
** Cash $51.5 million: Debt $2.05 billion
** Annual dividend $2.00
** Cash flow for the quarter was $103.9 million up from negative ($19.9 million)
** TTM cash flow was $246.3 million or $1.88 per share
** Trading range between September 21, 2012 and December 20, 2012 was $45.25 to $57.07: PE ratio range 12.43 to 15.08: PS ratio range was .73 to .92: Cash flow yield range was 3.3% to 4.2%: Dividend yield range was 3.5% to 4.4%

December 20, 2012 2Q:2013 2Q:2013 earnings’ highlights:
** Revenue was $1.96 billion up from $1.832 billion
** TTM revenue was $8.22 billion or $62.41 per share
** Earnings were $0.26 down from $0.40
** TTM earnings were $3.50
** Diluted share count 131.7 million
** Cash $61.4 million: debt $2.88 billion
** Cash flow for six months was negative ($87.6 million) up from negative ($258.1 million)
** TTM cash flow was $293 million or $2.23 per share
** Trading range between December 20, 2012 and March 22, 2013 was $44.11 to $49.53: PE ratio range was 12.60 to 14.15: PS ratio range was .71 to .79: Cash flow yield range was 4.5% to 5.1%

March 22, 2013 3Q:2013 earnings’ highlights:
** Revenue was $2.258 billion up from $2.16 billion
** TTM revenue was $8.32 billion or $63.26 per share
** Earnings were $1.02 down from $1.25
** TTM earnings were $3.27 per share
** Diluted share count 131.5 million
** Cash $103.9 million: debt $2.719 billion
** Cash flow for nine months was $171.5 million up from $67.1 million
** TTM cash flow was $226.9 million or $1.73 per share
** Annual dividend $2.20
** Trading range between March 22, 2013 and July 21, 2013 was $48.25 to $55.25: PE ratio was 14.76 to 16.90: PS Ratio range was .76 to .87: Cash flow yield range was 3.1% to 3.6%: Dividend yield range was 3.1% to 4.6%

July 21, 2013 4Q:2013 earnings’ highlights:
** 4Q revenue was $2.299 billion up from $2.066 billion
** Fiscal 2013 revenue was $8.552 billion up from $7998.7 billion
** TTM revenue was $64.69 per share
** 4Q earnings $1.01 down from $1.15
** Fiscal 2013 earnings were $3.13 down from $3.57
** Diluted share count 132.2 million
** Cash $88.2 million: debt $2.661 billion
** Cash flow for the year $263.9 million up from $122.5 million
** Cash flow per share $2.00 per share
** Annual dividend $2.20
** Trading range between July 21, 2013 and September 20, 2013 was $45 to $50.15: PE ratio range was 14.38 to 16: PS ratio range was .69 to 0.78: Cash flow yield range was 3.99% to 4.4%: Dividend yield range was 4.4% to 4.9%

September 20, 2013 1Q:2014 earnings’ highlights:
** Revenue was $2.159 billion up from $2.035 billion
** TTM revenue was $8.78 billion or $65.43 per share
** Earnings were $0.53 down from $0.85
** TTM earnings were $2.81 per share
** Diluted share count 132.6 million
** Cash $108.9 million: debt $2.7 billion
** Cash flow for the quarter $42.8 million down from $103.9 million
** TTM cash flow $202.8 million or $1.53 per share
** Trading range between September 20, 2013 and December 19, 2013 was $44.78 to $54.08: PE ratio range was 15.94 to 19.25: PS ratio range was .68 to .83: Cash flow yield range was 2.8% to 3.4%: Dividend yield range was 4.1% to 4.9%

December 19, 2013 2Q:2014 earnings’ highlights:
** Revenue was $2.05 billion up from $1.96 billion
** TTM Revenue was $8.87 billion or $66.79 per share
** Earnings were $0.15 down from $0.26
** TTM earnings were $2.70 per share
** Diluted share count 132.8 million
** Cash $84.6 million: debt $2.819 billion
** Cash flow for six months was negative ($40.9 million) up from negative ($87.6 million)
** TTM cash flow was $310.6 million or $2.34 per share
** Trading range between December 19, 2013 and March 21, 2014 was $44.78 to $54.08: PE ratio range was 16.59 to 20.03: PS ratio range was .67 to .81: Cash flow yield range was 4.3% to 5.2%: dividend yield range was 4.1% to 4.9%

March 21, 2014 3Q:2014 earnings’ highlights:
** Revenue was $2.233 billion down from $2.258 billion
** TTM revenue was $8.85 billion or $66.30 per share
** Earnings were $0.82 down from $1.02
** TTM earnings were $2.50
** Diluted share count 133.4 million
** Cash flow for nine months was $198.7 million up from $172 million
** TTM cash flow was $290.6 million or $2.18 per share
** Trading range between March 21, 2014 and June 20, 2014 was $47.83 to $52.50: PE ratio range was 19.3 to 21: PS ratio range was .72 to .79: Cash flow yield range was 4.2% to 4.6%: Dividend yield range was 4.2% to 4.6%

June 20, 2014 4Q:2014 earnings’ highlights:
** 4Q revenue was $1.65 billion up from $1.592 billion
** Fiscal 2014 $6.286 billion* up from $5.921 billion*
** TTM revenue per share $46.98 per share
** 4Q earnings were $0.65 down from $1.01
** Fiscal 2014 earnings $2.15 down from $3.13
** Cash and investments $98.3 million: debt $2.7 billion
** Cash flow for the year was $168.6 million or $1.26 per share
** Diluted share count 133.8 million
** Annual dividend $2.20
** Trading range between June 20, 2014 and the present was $45.80 to $48.53: PE ratio range was 21.30 to 22.56: PS ratio range was .98 to 1.03: Cash flow yield range was 2.6% to 2.75%: Dividend yield range was 4.5% to 4.8%

* Not including sales from discontinued Red Lobster business


tom e
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