Darden Restaurants (DRI) AI Stock Analysis

• Market Cap: $23.11B
• Dividend Yield: 3.06%
• Average Volume (3M): 1.24M
• Price to Earnings (P/E): 21.2
• Beta (1Y): 0.44
• Revenue Growth: 8.61%
• EPS Growth: 9.39%
• Country: US
• Employees: 191,105
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 2.95
• Shares Outstanding: 115,139,250
• 10 Day Avg. Volume: 1,404,049
• 30 Day Avg. Volume: 1,237,135
• PEG Ratio: 5.44
• Price to Book (P/B): 10.37
• Price to Sales (P/S): 1.99
• P/FCF Ratio: 23.16
• Enterprise Value/Market Cap: 1.28
• Enterprise Value/Revenue: 2.31
• Enterprise Value/Gross Profit: 4.03
• Enterprise Value/Ebitda: 16.38
• 1Y Price Target: $228.93
• Price Target Upside: 14.06% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16
• EPS Forecast (FY): 10.58
• Revenue Forecast (FY): $13.17B

• Rating: 71 Outperform
• Price Target: $222.00 ▲(10.61% Upside)
• Action: Upgraded Date: 03/19/26
• Date: Action: Upgraded 03/19/26

The score is driven mainly by strong operating performance and cash generation, reinforced by positive guidance from the latest earnings call. These strengths are partially offset by elevated balance-sheet leverage and weaker near-term technical momentum, while valuation is broadly reasonable with a solid dividend yield.

Positive Factors

Cash generation

Sustained free cash flow near $1.6B provides durable internal funding for new restaurant openings, maintenance capex, dividends and buybacks. Strong cash conversion improves financial flexibility and funds growth without immediate reliance on external financing, supporting unit expansion plans.

Unit growth & scale

Aggressive, multi-brand unit expansion and planned conversions leverage Darden's centralized purchasing and distribution, improving per-unit economics over time. Consistent openings expand footprint, deepen brand penetration and create durable operating leverage across sourcing and marketing investments.

Resilient revenue & margins

Multi-year revenue recovery and stable operating margins demonstrate the durability of Darden's full-service portfolio and pricing/mix power. Consistent profitability across brands supports cash returns and reinvestment, indicating a fundamentally resilient business model versus volatile, single-brand peers.

Negative Factors

Elevated leverage

High leverage materially increases financial risk and reduces flexibility to absorb shocks or pursue opportunistic investments. Interest and principal obligations constrain free-cash-flow allocation, heighten refinancing risk, and amplify downside in slower demand or margin compression environments.

Commodity cost exposure

Persistent beef and commodity inflation directly pressures restaurant-level margins in steak- and protein-heavy concepts. Structural volatility in key input prices forces either ongoing menu price increases that risk frequency or margin erosion if competitive dynamics prevent full recovery.

Underperforming brand actions

Permanent closures and conversions signal structural underperformance in parts of the portfolio, requiring capital and execution to re-position sites. Conversions carry execution, timing and team-placement risks and suggest some brands lack sustainable demand or unit-level economics.

Darden Restaurants Business Overview & Revenue Model

Company Description

Darden Restaurants, Inc., through its subsidiaries, owns and operates full-service restaurants in the United States and Canada. As of May 29, 2022, it owned and operated 1,867 restaurants, which included 884 under the Olive Garden brand, 546 under the LongHorn Steakhouse brand name, 172 under the Cheddar's Scratch Kitchen brand, 85 under the Yard House brand name, 62 under The Capital Grille brand, 45 under the Seasons 52 brand name, 42 under the Bahama Breeze brand, 28 under the Eddie V's Prime Seafood brand name, and 3 under the Capital Burger brand; and franchised 60 restaurants comprising 35 under the Olive Garden brand, 18 under the LongHorn Steakhouse brand name, 4 under the Cheddar's Scratch Kitchen brand, 2 under The Capital Grille brand name, and 1 under the Bahama Breeze brand.Darden Restaurants, Inc. was founded in 1968 and is based in Orlando, Florida.

How the Company Makes Money

Darden makes money primarily by selling food and beverages to guests across its owned and operated restaurants under multiple brands. Its core revenue stream is restaurant sales from on-premise dining (table service), supplemented by off-premise sales such as takeout and delivery orders, including catering/large-order occasions where applicable. A smaller, ancillary revenue stream comes from gift card sales and redemptions (recognized as revenue when cards are redeemed for food and beverage) and related promotional programs. Revenue is generated at the restaurant level through menu pricing, customer traffic, and product mix (e.g., entrées, alcoholic beverages, and add-ons), while profitability is influenced by restaurant operating costs such as food and beverage inputs, labor, occupancy (rent and utilities), and other operating expenses. Darden also benefits from scale via centralized purchasing, distribution, and supply chain management, which can reduce unit costs and support consistent product availability across its brands. Where delivery is offered, third-party delivery marketplaces may be used; in such cases, Darden typically earns revenue from the food and beverage sale while incurring fees/commissions and related fulfillment costs that affect margins.

Darden Restaurants Financial Statement Overview

Summary

Solid profitability and strong free cash flow (TTM FCF ~$1.57B) support the business, but the balance sheet is a meaningful constraint due to elevated leverage (debt-to-equity ~3.1x TTM).

Income Statement

DRI shows solid profitability and a steady operating profile. In TTM (Trailing-Twelve-Months), net margin is ~8.9% with operating margin ~11.2% and EBITDA margin ~15.5%, broadly consistent with recent years. Revenue has grown from ~$7.2B (2021) to ~$12.1B (2025) and ~$12.8B TTM, indicating a strong multi-year recovery and expansion, though the TTM revenue growth rate appears unusually high versus prior annual growth and may reflect timing/one-off effects. A key watch item is the sharp step-up in TTM gross margin versus prior annual levels, which could indicate a classification/mix change rather than purely underlying improvement.

Balance Sheet

The balance sheet is levered, which increases financial risk. Total debt is ~$6.2B in both 2025 and TTM (Trailing-Twelve-Months), while equity is relatively modest (~$2.1B TTM), resulting in high leverage (debt-to-equity ~3.1x TTM, up from ~2.7x in 2025). Returns on equity are very high (TTM ~51%), but this is amplified by leverage and a smaller equity base rather than solely stronger operating performance. Asset base has grown, but the capital structure remains the main constraint on the balance sheet score.

Cash Flow

Cash generation is a clear strength, with operating cash flow of ~$1.74B and free cash flow of ~$1.57B in TTM (Trailing-Twelve-Months). Free cash flow improved materially versus 2025 (~$1.04B), and TTM free cash flow growth is strong. Cash conversion is decent but not exceptional: free cash flow is about ~0.80x net income in TTM (better than ~0.61x in 2025), suggesting improved cash efficiency. However, operating cash flow relative to accounting earnings is not consistently strong (operating cash flow to net income is ~0.64x TTM), which is a point to monitor for working-capital or timing effects.

Breakdown	TTM	May 2025	May 2024	May 2023	May 2022	May 2021
Income Statement
Total Revenue	12.76B	12.08B	11.39B	10.49B	9.63B	7.20B
Gross Profit	7.34B	2.64B	2.43B	2.11B	2.00B	1.49B
EBITDA	1.80B	1.88B	1.78B	1.60B	1.53B	992.60M
Net Income	1.11B	1.05B	1.03B	981.90M	952.80M	629.30M
Balance Sheet
Total Assets	12.89B	12.59B	11.32B	10.24B	10.14B	10.66B
Cash, Cash Equivalents and Short-Term Investments	240.40M	240.00M	194.80M	367.80M	420.60M	1.21B
Total Debt	6.19B	6.23B	5.43B	4.79B	4.89B	5.76B
Total Liabilities	10.78B	10.28B	9.08B	8.04B	7.94B	7.84B
Stockholders Equity	2.10B	2.31B	2.24B	2.20B	2.20B	2.81B
Cash Flow
Free Cash Flow	1.57B	1.04B	983.60M	951.80M	857.00M	924.90M
Operating Cash Flow	1.74B	1.71B	1.61B	1.55B	1.26B	1.19B
Investing Cash Flow	-178.70M	-1.28B	-1.32B	-568.40M	-389.00M	-263.70M
Financing Cash Flow	-261.90M	-385.80M	-483.40M	-1.03B	-1.61B	-478.90M

Darden Restaurants Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 200.71
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRI, the sentiment is Negative. The current price of 200.71 is below the 20-day moving average (MA) of 207.65, below the 50-day MA of 207.42, and above the 200-day MA of 197.72, indicating a neutral trend. The MACD of -1.62 indicates Positive momentum. The RSI at 43.13 is Neutral, neither overbought nor oversold. The STOCH value of 56.03 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DRI.

Darden Restaurants Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YUMC	75 Outperform	$18.63B	18.45	16.41%	1.98%	3.29%	6.72%
YUM	74 Outperform	$43.98B	26.98	-20.57%	1.84%	11.60%	-4.33%
DRI	71 Outperform	$23.11B	21.17	50.89%	3.06%	8.61%	9.39%
TXRH	67 Neutral	$11.11B	32.67	28.20%	1.63%	14.40%	12.45%
EAT	64 Neutral	$6.10B	13.13	134.24%	―	23.18%	138.17%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
QSR	61 Neutral	$33.85B	29.37	23.08%	3.60%	16.82%	-29.91%