Darden Restaurants Inc. (NYSE:DRI) has reported a series of stock transactions by SVP General Counsel, Matthew R. Broad, according to the latest SEC filings. Broad offloaded a total of 5,171 shares of the company's common stock at an average price of $146.4761, resulting in a total value of approximately $757,427.
The transactions occurred on July 29, 2024, and were executed in multiple trades with prices ranging from $146.385 to $146.59. The reported price represents the weighted average sale price. The sale significantly reduced Broad's holdings in the company, leaving him with 16,155.43 shares of Darden Restaurants' common stock.
In addition to the sale, Broad also acquired shares through the exercise of options. On July 28, 2024, he acquired 2,264 shares and 1,703 shares through option exercises, with the transactions being reported at a price of $0.00, indicating these might have been granted as part of his compensation package. These transactions did not affect the total number of shares he owns due to their nature as option exercises.
Furthermore, on the same day, Broad disposed of 671 shares and 891 shares at a price of $142.27 per share to cover tax liabilities, totaling approximately $222,225. These dispositions are commonly done to satisfy tax obligations related to the vesting of restricted stock.
The SEC filing also included transactions under code "G," which represented a gift of 300 shares at a price of $0.00. Gifts of stock do not typically reflect on market sentiment as they are personal decisions and are not market transactions.
Investors often look to insider buying and selling as a signal of executive confidence in the company. Sales can sometimes indicate an executive’s belief that the stock may be fully valued or that they are diversifying their investments, while purchases can suggest confidence in the company’s future performance. However, these transactions can also be part of regular compensation or tax planning and do not always signal a change in company outlook.
Darden Restaurants, headquartered in Orlando, Florida, operates several well-known restaurant chains and is a leading name in the full-service dining sector. As with any insider transactions, investors are encouraged to consider the broader context of the market and the company's performance when assessing the potential impact of these stock trades.
In other recent news, Darden Restaurants reported an 8.6% increase in total sales to $11.4 billion for fiscal year 2024, and an adjusted diluted net earnings per share of $8.88, surpassing expectations. The company also announced plans to acquire Chuy's (NASDAQ:CHUY), a chain of full-service Tex-Mex restaurants, for $605 million. This acquisition is expected to be neutral to Darden's earnings per share for fiscal year 2025. However, TD (TSX:TD) Cowen downgraded Darden's rating from Buy to Hold due to concerns over the expected performance of the company's stock, while Jefferies downgraded Darden's stock from Hold to Underperform, citing concerns about the company's near-term fundamentals. Despite these changes, UBS has maintained a Buy rating for Darden, following the company's strategic acquisition of Chuy's. These are the recent developments in Darden's business operations.
InvestingPro Insights
As investors digest the recent insider transactions at Darden Restaurants Inc. (NYSE:DRI), it's valuable to consider the company's financial health and market performance through the lens of InvestingPro data and insights. Darden Restaurants has demonstrated a commitment to shareholder returns, as evidenced by its track record of raising its dividend for three consecutive years, and remarkably, maintaining dividend payments for 30 consecutive years, an InvestingPro Tip notes. This could be a sign of the company's stability and a potentially attractive feature for income-focused investors.
From a valuation standpoint, Darden Restaurants is currently trading at a P/E ratio of 17.27, with a slight adjustment to 16.91 when looking at the last twelve months as of Q4 2024. This figure suggests a relatively high valuation compared to near-term earnings growth, another InvestingPro Tip highlights. Despite this, the company's revenue has grown by 8.6% over the last twelve months, indicating a solid top-line expansion.
InvestingPro Data further reveals a dividend yield of 3.78% as of the end of 2024, which is quite competitive in the full-service dining sector. Additionally, the company's gross profit margin stands at 21.16% for the same period, reflecting a healthy profitability level that could reassure investors of its operational efficiency.
For those considering adding DRI to their portfolio, InvestingPro offers additional insights and tips. There are 6 more InvestingPro Tips available, which can be accessed at https://www.investing.com/pro/DRI. To enhance your investment research, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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