Dj Darden Restaurants Inc. Stock Underperforms Tuesday When Compared To Competitors

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The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.

Zacks Premium includes access to the Zacks Style Scores as well.

What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.

The Style Scores are broken down into four categories:

Value Score

Value investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.

Growth Score

While good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.

Momentum Score

Momentum traders and investors live by the saying "the trend is your friend." This investing style is all about taking advantage of upward or downward trends in a stock's price or earnings outlook. Employing factors like one-week price change and the monthly percentage change in earnings estimates, the Momentum Style Score can indicate favorable times to build a position in high-momentum stocks.

VGM Score

What if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.

That's where the Style Scores come in.

To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Darden Restaurants (DRI)

Founded in 1968 and based in Orlando, FL, Darden Restaurants is one of the largest casual dining restaurant operators worldwide.

DRI is a #3 (Hold) on the Zacks Rank, with a VGM Score of B.

Additionally, the company could be a top pick for growth investors. DRI has a Growth Style Score of B, forecasting year-over-year earnings growth of 6.6% for the current fiscal year.

Five analysts revised their earnings estimate upwards in the last 60 days for fiscal 2025. The Zacks Consensus Estimate has increased $0 to $9.47 per share. DRI boasts an average earnings surprise of 1.3%.

With a solid Zacks Rank and top-tier Growth and VGM Style Scores, DRI should be on investors' short list.

Zacks Investment Research

Arcos Dorados Holdings Inc. ARCO is scheduled to report third-quarter 2024 results on Nov. 13.

ARCO’s Q3 Estimates

The Zacks Consensus Estimate for earnings is pegged at 16 cents per share, down 46.7% year over year. In the past 30 days, earnings estimates have remained stable. The consensus mark for revenues is pegged at $1.11 billion, down 0.4% year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Factors to Note Ahead of ARCO’s Q3 Release

Arcos Dorados’ upcoming quarterly results are likely to be hurt by high costs and weakened consumer demand. The dismal performance in Argentina is likely to have hurt the company’s top line. ARCO continues to invest heavily in its digital and IT infrastructure, including restaurant-level digital tools, which is likely to have increased operational expenses. These investments aim to improve long-term efficiency and customer experience but might have increased short-term costs.

Rising costs in areas such as labor, utilities and IT are likely to have impacted margins across ARCO’s key markets. Mexico, in particular, might have experienced higher payroll expenses due to wage inflation.

Robust comparable sales, expansion efforts as well as strong performance in Brazil and the North Latin America’s divisions bode well. The company is likely to have witnessed positive guest traffic in the quarter to be reported. Robust digital sales are anticipated to have aided ARCO's quarterly performance.

Arcos Dorados Holdings Inc. Price and EPS Surprise

Arcos Dorados Holdings Inc. price-eps-surprise | Arcos Dorados Holdings Inc. Quote

What Our Model Says for ARCO

Our proven model doesn’t conclusively predict an earnings beat for Arcos Dorados this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.

ARCO’s Earnings ESP: Arcos Dorados has an Earnings ESP of 0.00% at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank of ARCO: Arcos Dorados currently carries a Zacks Rank #4 (Sell).

Stocks With Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this reporting cycle:

CAVA Group, Inc. CAVA currently has an Earnings ESP of +3.38% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for EPS is pegged at 11 cents, which implies an increase of 83.3% from the prior-year actuals. The Zacks Consensus Estimate for quarterly revenues is pegged at $234.9 million, which indicates a rise of 33.8% from the year-earlier levels. CAVA has a trailing four-quarter earnings surprise of 257.7%, on average.

Ollie's Bargain OLLI currently has an Earnings ESP of +1.50% and a Zacks Rank of 3. The Zacks Consensus Estimate for quarterly EPS of 57 cents implies an increase of 11.8% from the year-ago reported number.

The Zacks Consensus Estimate for quarterly revenues is pegged at $519 million, implying a jump of 8.1% from the prior-year quarter. OLLI has a trailing four-quarter earnings surprise of 7.9%, on average.

Darden Restaurants, Inc. DRI currently has an Earnings ESP of +0.07% and a Zacks Rank #3. The Zacks Consensus Estimate for DRI’s quarterly revenues is pegged at $2.86 billion, which implies a rise of 4.9% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for DRI’s quarterly earnings has remained unchanged at $2.06 per share in the past 30 days, which indicates a 12% increase from the year-ago quarter’s reported number. DRI has a trailing four-quarter earnings surprise of 1.3%, on average.

Zacks Investment Research

Papa John's International, Inc. PZZA is scheduled to report third-quarter 2024 results on Nov. 7, before the opening bell. In the last reported quarter, its earnings beat the Zacks Consensus Estimate by 19.6%.

Papa John's Q3 Estimates

The Zacks Consensus Estimate for earnings is pegged at 42 cents per share, indicating a decline of 20.8% from the prior-year level. In the past seven days, the consensus estimate for earnings has witnessed upward revisions of 5%. The consensus mark for revenues is pegged at $491.8 million, implying a decline of 5.9% from the year-ago level.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Factors to Note for Papa John's Q3 Release

The company’s upcoming quarterly results are likely to be hurt by disappointing comparable sales. Sales trends in certain regions, like the Middle East and China, remain challenging. The decline in transactions, caused by a reduction in organic delivery orders, is likely to have negatively impacted PZZA’s performance.

North America's comparable sales experienced a slight decline in the first four weeks of the third quarter. This trend might have continued due to ongoing economic challenges.

However, expansion endeavors, initiatives to enhance sales and focus on digitalization bode well. PZZA has been investing significantly in technology-driven strategies, particularly in digital ordering, aiming to stimulate sales.

We expect domestic company-owned restaurant sales and international revenues to decrease 5.3% and 7% from the year-ago levels, respectively. Our model predicts North America’s commissary revenues and franchise royalties & fees to decline 5.2% and 4.3% from the year-earlier actuals, respectively. We anticipate total comparable sales to decline 5.8% year over year.

High cost is likely to have hurt PZZA’s bottom line. Higher performance-based compensation expenses, depreciation and amortization expenses, as the company continued to invest in its restaurants and technology support, are likely to have driven costs in the quarter to be reported.

Papa John's International, Inc. Price and EPS Surprise

Papa John's International, Inc. price-eps-surprise | Papa John's International, Inc. Quote

What the Zacks Model Unveils for PZZA

Our proven model predicts an earnings beat for Papa John's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here.

Earnings ESP: Papa John's has an Earnings ESP of +3.41% at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Papa John's currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

CAVA Group, Inc. CAVA currently has an Earnings ESP of +3.38% and a Zacks Rank #2. The Zacks Consensus Estimate for EPS is pegged at 11 cents, which implies an increase of 83.3% from the prior-year actuals.

The Zacks Consensus Estimate for quarterly revenues is pegged at $234.9 million, which indicates a rise of 33.8% from the year-earlier levels. CAVA has a trailing four-quarter earnings surprise of 257.7%, on average.

Ollie's Bargain OLLI currently has an Earnings ESP of +1.50% and a Zacks Rank of 3. The Zacks Consensus Estimate for quarterly EPS of 57 cents implies an increase of 11.8% from the year-ago reported number.

The Zacks Consensus Estimate for quarterly revenues is pegged at $519 million, implying a jump of 8.1% from the prior-year quarter. OLLI has a trailing four-quarter earnings surprise of 7.9%, on average.

Darden Restaurants, Inc. DRI currently has an Earnings ESP of +0.07% and a Zacks Rank #3. The Zacks Consensus Estimate for DRI’s quarterly revenues is pegged at $2.86 billion, which implies a rise of 4.9% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for DRI’s quarterly earnings has been unchanged at $2.06 per share in the past 30 days, which indicates 12% increase from the year-ago quarter’s reported number. DRI has a trailing four-quarter earnings surprise of 1.3%, on average.

Zacks Investment Research