A Board Member Bought Almost $500,000 Worth of Darden

Other table service restaurants include Applebee’s and IHOP owner DineEquity Inc (NYSE:DIN), Chilis owner Brinker International, Inc. (NYSE:EAT), The Cheesecake Factory Incorporated (NASDAQ:CAKE), and Texas Roadhouse Inc (NASDAQ:TXRH). The latter three have trailing earnings multiples in the 17-18 range, representing a substantial premium to where Darden trades. However, each of the three has been reporting rises in both revenue and earnings, with both being above 10% in the case of Texas Roadhouse. As a result there is a case to be made that these stocks are better values, and it’s certainly interesting to see a combination of earnings growth and a trailing P/E in the teens. Brinker also made our list of the ten most popular restaurant stocks among hedge funds in the third quarter of 2012 (see the rest of the top ten). Investors might want to learn more about them as a result. DineEquity trades at 16 times analyst consensus for 2013, and the company’s revenue has been in decline. 10% of the company’s outstanding shares are held short; we think it might be better to pass on DineEquity in favor of the other restaurants we’ve discussed.

It’s possible that the market has overreacted to Darden’s poor quarter, and that is likely what Lewis thinks has happened. The stock is cheap enough that the company could be a good value if it stabilizes, but we think that Brinker, the Cheesecake Factory, and Texas Roadhouse might be more reliable bets. They are more expensive, but the recent financial performance of these restaurants has been quite good.

Disclosure: I own no shares of any stock mentioned in this article.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!