Darden Restaurants (DRI), a conglomerate company that operates restaurants under the Red Lobster and Olive Garden names, has implemented changes in its restaurants that may present long-term value and benefit the business model, says Will Slabaugh, Vice President and Equity Research Analyst at Stephens Inc.
“I think it’s a universal call to be cautious on Darden (DRI) right now, and that’s simply because they have had a lot of changes within Red Lobster and within Olive Garden over the past few quarters, and those results have been fairly mixed,” Slabaugh said.
Slabaugh says that it may take time for these changes to benefit the model, and that even a small amount of positive news may be enough to turn DRI‘s stock around.
“When I take a look at the valuation, when I take a look at the dividend yield that the company is providing, I think that it won’t take much positive news to be able to turn the stock around, so in the near term, operationally I think there are some issues they have to work through, but I think longer term it probably does present a fairly compelling value here,” Slabaugh said.
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