Olive Garden Parent Falls on CEO Exit, Forecast Whiff

DRI is brushing off a better-than-expected fiscal second-quarter report

Deputy Editor
Dec 17, 2021 at 10:34 AM
facebook twitter linkedin


Olive Garden parent Darden Restaurants Inc (NYSE:DRI) is down 7.8% to trade at $135.72 at last check, despite better-than-expected fiscal second-quarter results. Weighing on the stock today is the company's announcement that CEO Eugene Lee Jr. is to retire at the end of May, replaced by Chief Operating Officer Ricardo Cardenas. Plus, the restaurant name's 2022 full-year forecast came in below expectations. 

Today's negative price action has DRI dropping below the $136 level for the first time since August. The stock is also gapping below its 200-day moving average, which had had been a significant level of support earlier in the year. Year-to-date, the equity is still up 15.3%. 

The majority of analysts are bullish on Darden Restaurant stock, with 14 of the 20 in coverage carrying a "buy" or better rating, and six a tepid "hold." Plus, the 12-month consensus price target of $169.34 is a roughly 24% premium to current levels. 

Options traders, on the other hand, have been more pessimistic than usual over the last 10 weeks. This is per DRI's 50-day put/call volume ratio of 1.98 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 82% of readings in its annual range. 

That bearishness is holding true today, with 3,742 puts across the tape so far in comparison to 1,777 calls. This options volume is six times what's typically seen at this point, with put volume pacing for the top percentile of its annual range. The December 135 put is the most popular, which expires at the end of the day today. 

 

 

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

 
Best stocks for October and worst stocks for October
 


 


 
Special Offers from Schaeffer's Trading Partners