Corporate executives and directors tend to have superior information in relation to their firms’ operating activities. If these insiders are buying company stock, it’s generally a bullish signal.
Here, we are going to highlight some big buying from an insider at Darden Restaurants Inc (DRI:US). Darden Restaurants is an American company that operates over 1,800 full-service dining restaurants across North America. Its brands include LongHorn Steakhouse, The Capital Grille, Bahama Breeze, and Eddie V’s. It’s listed on the New York Stock Exchange and currently has a market capitalization of $14.48 billion.
Insider Buying at Darden Restaurants
Our insider transaction data shows on June 28, board member Timothy Wilmott purchased 10,000 DRI shares at a price of $120.00 per share. This purchase cost the director $1.2 million and increased his holding in the company by around 60%.
High Value Insider Trade
We see this insider trading activity as significant for two reasons.
Firstly, Mr. Wilmott has spent over a million dollars on company stock and raised his stake by about 60%. This suggests he is very confident that the market is undervaluing the shares.
Secondly, Mr. Wilmott is an experienced businessman. He was formerly the CEO of Penn National Gaming and was also the COO of Caesars Entertainment Inc. It’s worth noting that his last purchase of Darden Restaurants stock back in 2020 was made at a price over 50% below the price where the shares are currently trading.
Darden Restaurants recently posted solid Q4 results that were ahead of analysts’ estimates.
For the period, total sales were $2.6 billion, up 14.2% on the same period a year prior. Meanwhile, earnings per share came in at $2.27, above the consensus forecast of $2.21. On the back of these results, the company authorized a new $1 billion share repurchase program.
Looking ahead, Darden said that it expects total sales for the year ahead to grow to between $10.2 billion and $10.4 billion, up from $9.6 million last year, and gave a diluted net EPS range of $7.40 to $8.00.
“As we begin our new fiscal year, our focus remains on driving profitable sales, investing in the guest experience and simplifying operations. Darden's strategy, and our strong balance sheet, positions us well regardless of the operating environment," said Darden’s CEO, Nick Cardenas.
It’s worth noting that Darden’s share price has experienced a significant decline recently on the back of inflation concerns. Since mid-February, the stock has fallen from near $150 to below $120.
The purchase from Mr. Wilmott indicates that he sees value at current levels. We see this insider buying activity as a bullish indicator.