Wall Street sentiment is negative this morning, especially when it comes to tech stocks which exhibited weakness in pre-market trading. All three benchmarks are still set to log weekly gains and have exhibited strength since the start of 2021.
Today marks the second full day of Joe Biden’s presidency. President Biden has taken several actions during his first days in office to control the virus and offer economic relief. Today he plans to sign two executive orders to provide stopgap financial relief to millions of Americans while lawmakers begin to consider his massive $1.9 trillion Covid stimulus package.
The package includes direct payments to most Americans of $1,400. With many Americans still out of work and struggling financially, the bulk of the checks may be spent on rent, groceries and basic necessities.
But some of it will also be splurged on frivolous little luxuries like a restaurant meal. This, in tandem with a vaccine rollout, could give a boost to chain restaurant stocks like the one featured in today’s WSWD trade alert.
Darden Restaurants (DRI) is the parent company of the Olive Garden, LongHorn Steakhouse, The Capital Grille, Seasons 52, Bahama Breeze and other popular restaurants.
The past year has been a brutal one for the restaurant business. Due to COVID-related capacity restrictions, America’s restaurants have been largely empty since last March. Demand for carryout has been strong, but diners tend to spend less on carryout orders, particularly on high-margin alcoholic beverages and desserts.
Brighter days are ahead, as restaurants will be one of the greatest beneficiaries of a successful vaccine rollout. Darden has already recouped its 2020 losses, and further gains could be ahead as the world starts to look a little more normal.
The company expects total sales between 65% and 70% of prior-year sales. EBITDA is anticipated in the range of $170 million to $210 million. Earnings per share from continuing operations are anticipated at 50-75 cents.
The company expects to open 35-40 net new restaurants and project total capital spending at $250 to $300 million in fiscal 2021.
Of 22 analysts covering the stock 13 consider the stock a Strong Buy, 2 rate it a Buy and 7 analysts call DRI stock a Hold. There are no Sell ratings for the stock.
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