Darden Restaurants: Strong Sales Momentum and Cyclical Cost Headwinds Create Attractive Buy Entry Point

Stifel Nicolaus analyst Chris O`Cull has maintained their bullish stance on DRI stock, giving a Buy rating today.

Chris O`Cull has given his Buy rating due to a combination of factors that, in his view, position Darden well despite near‑term margin pressure. He notes that the slight EPS miss was largely driven by temporary beef cost inflation rather than any deterioration in demand, while same-restaurant sales trends—particularly at Olive Garden—remain robust and are outpacing the broader industry. Initiatives such as the Lighter Portions menu, ongoing limited-time offers, and greater use of Uber Direct for marketing and fulfillment are expected to sustain traffic gains and broaden the brand’s appeal, including to more value- and health-conscious guests.

O`Cull also emphasizes that management is deliberately keeping menu price increases below overall cost inflation, which supports guest value perceptions and should protect traffic over time. Although commodity costs, especially beef, are pressuring margins in the current period, his analysis assumes these input cost headwinds are cyclical and likely to ease in the back half of the fiscal year, setting up a recovery in restaurant profitability. With strong sales momentum, improving margin prospects as inflation normalizes, and what he views as an attractive entry point created by temporarily compressed earnings, he concludes the risk/reward profile justifies a Buy recommendation on Darden shares.

O`Cull covers the Consumer Cyclical sector, focusing on stocks such as Brinker International, Driven Brands Holdings, and CAVA Group, Inc.. According to TipRanks, O`Cull has an average return of 10.6% and a 54.82% success rate on recommended stocks.

In another report released today, Citi also maintained a Buy rating on the stock with a $234.00 price target.