Is Darden Restaurants Stock Overcooked? A Look At The Chart After Q2 Earnings

Despite the S&P 500 index being in a yearlong beat market, many issues are at or near all-time highs. One of those issues is Darden Restaurants, Inc. DRI which is the PreMarket Prep Stock of the Day.

Darden Beats The S&P 500 Index: After ending 2021 at $150.64, the issue peaked in January at $155.25. It yearly low was made in June at $110.96 and its price ($137) is down 9%. As of Thursday’s close, it was only off by 5%.

Meanwhile, the S&P 500 at a price of 3,831 is down 20% for the year.

Darden Sellers Show Up Ahead Of Q3 Report: Similar to the S&P 500 index., Darden peaked on Tuesday at $148.15, which coincided with its Dec. 1 high ($148.04). Weak market conditions and trepidation over the reaction to its second-quarter report nudged the issue to end Thursday’s session at $142.86.

Darden's Q2 Report: Before the opening Friday, Darden reported quarterly earnings of $1.52 per share, which beat the analyst consensus estimate of $1.43 by 6.29%. This is a 2.7% increase over earnings of $1.48 per share from the same period last year.

Also, the company reported quarterly sales of $2.49 billion, which beat the analyst consensus estimate of $2.42 billion by 2.75%. This is a 9.44% increase over sales of $2.27 billion in the same period last year.

Finally, the company offered up guidance for 2023. The company forecasts FY23 EPS of $7.60-$8 vs. a$7.71 estimate and total sales of $10.3 billion-$10.45 billion vs. a $10.31-billion estimate.

PreMarket Prep's Take: When the issue was being covered on the show Friday, it was trading flat at $142.88. Co-host Dennis Dick, who fears a deep recession in 2023, had no hesitation in saying: "If I owned it, I would sell it."

The author of this article alerted investors to the multiple lows at the $140 area that, if breached, may lead to an extended decline.

DRI Price Action: Heading into the opening bells, big sellers emerged, knocking the issue to $132.60 moments before the session began.

That instigated a much lower first print ($132.60 vs. $142.86). Darden continued lower, but immediately bottomed at $131.90 and sharply reversed course.

As of 1:45 p.m. EST, it has topped out at $140.30 and is trading actively in the $137 handle. That high was only 60 cents shy of the bottom of Thursday’s range and should be formidable resistance next week.

On the downside, since the issue rebounded so sharply off that low, buyers may reemerge above the level on any further weakness.

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