EAT - Darden's guidance said to look positive for restaurant sector

Darden Restaurants (DRI) is up 4.47% in premarket action after a strong FQ3 earnings report and capital allocations moves. Wells Fargo thinks the strong report could be a positive indicator for the restaurant sector. Analyst Jon Tower: "If DRI's guidance for F4Q is any indication for industry sales strength & margin flow through, then we are likely to see a wave of positive earnings revisions across the category starting late next month. F4QTD SSS are already running ahead of Street expectations for the quarter, with the most recent week positive vs. 2019 (consensus for OG/LH down 13%/11% vs 2019). This should assuage any investor concerns that incremental labor reinvestments will be offset by strong consumer demand for the brand (i.e., pass through to consumers in pricing) and keep the margin opportunity intact (most recently outlined as hitting TTM Feb '20 EBITDA at 90% TTM rev, implying ~15.6% EBITDA margin)." Brinker

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Darden's guidance said to look positive for restaurant sector