• Darden Restaurants (DRI) shows strong technical momentum, trading near its 52-week high.
• The stock has a 100% technical “Buy” signal via Barchart and consistent price appreciation.
• Shares are up more than 44% over the past 52 weeks.
• Fundamentals remain solid and analyst sentiment is moderately bullish.

Today’s Featured Stock:

Valued at $25.07 billion, Darden Restaurants (DRI) is one of the largest casual dining restaurant operators worldwide. The company has operations in the U.S. and Canada with more than 1,700 restaurants. These restaurants cover brands like Olive Garden and LongHorn Steakhouse.

What I’m Watching:

I found today’s Chart of the Day by using Barchart’s powerful screening functions. I sorted for stocks with the highest technical buy signals, superior current momentum in both strength and direction, and a Trend Seeker “buy” signal. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. DRI checks those boxes. Since the Trend Seeker signaled a buy on May 15, the stock has gained 3.76%.

DRI Price vs. Daily Moving Averages:

Barchart Technical Indicators for Darden:

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

When a stock is trading only 0.02% below its 52-week high, it won’t take much to hit another new high.

• Darden has a 100% technical “Buy” signal.
• The stock closed at $216.85 on June 2, above its 50-day moving average of $202.98.
• DRI has a Weighted Alpha of +48.61.
• The stock has gained 44.19% over the past year.
• DRI has its Trend Seeker “Buy” signal intact.
• Darden is trading above its 20, 50 and 100-day moving averages.
• The stock has made 9 new highs and gained 6.36% in the last month.
• Relative Strength Index is at 67.38%.
• The technical support level is $213.95.

Follow the Fundamentals:

• $25.07 billion market cap.
• 23.15x trailing price-earnings ratio.
• 2.58% Dividend yield
• Revenue is projected to grow 3.88% this year and another 8.81% next year.
• Earnings are estimated to increase 6.92% this year and an additional 12.67% next year.

Analyst and Investor Sentiment on Darden:

I don’t buy stocks because everyone else is buying, but I do realize that if major firms and investors are dumping a stock, it’s hard to make money swimming against the tide.

It looks like not only Wall Street analysts, but also many of the popular investing advisory services, are moderately bullish on this stock.

• Wall Street analysts tracked by Barchart issued 16 “Strong Buy,” two “Moderate Buy,” eight “Hold,” and one “Sell” opinion on the stock.
• Value Line gives the stock an average rating.
• CFRA’s MarketScope rates the stock a “Hold.”
• MorningStar thinks the stock is 47% overvalued but comments positively: “In our view, scale has allowed Darden to flex its muscle through favorable procurement costs, efficiency-enabling operational investments like its to-go platform and Cheddar’s point-of-sale and kitchen layout revamp, and judicious marketing support. While full-service competitors have seen restaurant-level margins fall well below figures from the early 2010s (to the low to mid-teens from the mid-20s), Darden has been able to launch a value-oriented menu and generate margin through transaction volume, underpinning consolidated restaurant margins of 20%.”
• 30,120 investors monitor the stock on Seeking Alpha, which rates the stock a “Buy.”

The Bottom Line:

Darden currently has momentum and support from both the market and individual investors and seems to be beating its competition.

I caution that DRI is volatile and speculative — use strict risk management and stop-loss strategies.

Additional disclosure: The Barchart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance.