Critical Review: Darden Restaurants (NYSE:DRI) and Travel + Leisure (NYSE:TNL)

Darden Restaurants (NYSE:DRI – Get Free Report) and Travel + Leisure (NYSE:TNL – Get Free Report) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, earnings, analyst recommendations and profitability.

Valuation & Earnings

This table compares Darden Restaurants and Travel + Leisure”s gross revenue, earnings per share and valuation.

Darden Restaurants has higher revenue and earnings than Travel + Leisure. Travel + Leisure is trading at a lower price-to-earnings ratio than Darden Restaurants, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Darden Restaurants has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500. Comparatively, Travel + Leisure has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Darden Restaurants and Travel + Leisure, as provided by MarketBeat.

Darden Restaurants presently has a consensus price target of $232.38, suggesting a potential upside of 17.58%. Travel + Leisure has a consensus price target of $89.18, suggesting a potential upside of 41.70%. Given Travel + Leisure’s stronger consensus rating and higher probable upside, analysts plainly believe Travel + Leisure is more favorable than Darden Restaurants.

Profitability

This table compares Darden Restaurants and Travel + Leisure’s net margins, return on equity and return on assets.

Dividends

Darden Restaurants pays an annual dividend of $6.48 per share and has a dividend yield of 3.3%. Travel + Leisure pays an annual dividend of $2.40 per share and has a dividend yield of 3.8%. Darden Restaurants pays out 63.3% of its earnings in the form of a dividend. Travel + Leisure pays out 65.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Darden Restaurants has raised its dividend for 4 consecutive years and Travel + Leisure has raised its dividend for 5 consecutive years. Travel + Leisure is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

93.6% of Darden Restaurants shares are held by institutional investors. Comparatively, 87.5% of Travel + Leisure shares are held by institutional investors. 0.7% of Darden Restaurants shares are held by company insiders. Comparatively, 4.0% of Travel + Leisure shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Darden Restaurants beats Travel + Leisure on 11 of the 17 factors compared between the two stocks.

About Darden Restaurants

(Get Free Report)

Darden Restaurants, Inc., together with its subsidiaries, owns and operates full-service restaurants in the United States and Canada. It operates under Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s Prime Seafood, and Capital Burger brand names. Darden Restaurants, Inc. was incorporated in 1995 and is based in Orlando, Florida.

About Travel + Leisure

(Get Free Report)

Travel + Leisure Co., together with its subsidiaries, provides hospitality services and travel products in the United States and internationally. The company operates in two segments, Vacation Ownership; and Travel and Membership. The Vacation Ownership segment develops, markets, and sells vacation ownership interests (VOIs) to individual consumers, as well as provides consumer financing in connection with the sale of VOIs; and property management services at resorts. The Travel and Membership segment operates various travel businesses, including three vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals. This segment also offers private-label travel booking technology solutions. The company was formerly known as Wyndham Destinations, Inc. and changed its name to Travel + Leisure Co. in February 2021. Travel + Leisure Co. was founded in 1990 and is headquartered in Orlando, Florida.