Darden Restaurants (DRI)
NYSE:DRI
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Darden Restaurants
(NYSE:DRI)
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Rating:71Outperform
Price Target:
$222.00
▲(16.46% Upside)
Action:UpgradedDate: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.
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.
Read all positive and negative factors
Positive Factors
Negative 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.
Read all positive factors
Darden Restaurants (DRI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$21.83B
Dividend Yield3.06%
Average Volume (3M)1.53M
Price to Earnings (P/E)20.2
Beta (1Y)0.49
Revenue Growth8.61%
EPS Growth9.39%
CountryUS
Employees191,105
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)2.95
Shares Outstanding114,535,000
10 Day Avg. Volume1,748,572
30 Day Avg. Volume1,526,967
Financial Highlights & Ratios
PEG Ratio5.44
Price to Book (P/B)10.37
Price to Sales (P/S)1.99
P/FCF Ratio23.16
Enterprise Value/Market Cap1.30
Enterprise Value/Revenue2.23
Enterprise Value/Gross Profit5.06
Enterprise Value/Ebitda14.35
Forecast
1Y Price Target
$227.06Price Target Upside19.11% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering21
EPS Forecast (FY)10.62
Revenue Forecast (FY)$13.21B
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...
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 s...
Darden Restaurants Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down revenue streams from various segments, indicating which parts of the business are thriving and which may need strategic attention.
Breaks down revenue streams from various segments, indicating which parts of the business are thriving and which may need strategic attention.
Data provided by:
The Fly
The FlyDarden Restaurants Earnings Call Summary
Earnings Call Date:Mar 19, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Jun 18, 2026
Earnings Call Sentiment Positive
The call conveyed a clearly positive operational and financial performance: meaningful top-line growth, brand-level outperformance (notably LongHorn and Olive Garden), EPS growth, strong unit growth plans, and disciplined capital returns. Headwinds include elevated commodity (beef) costs, modest margin compression, weather-related disruption, and strategic restructuring of Bahama Breeze. Management provided constructive guidance for Q4 and FY26 and signaled prudent flexibility on pricing and marketing. On balance, positive achievements and guidance materially outweigh the listed challenges.Positive Updates
Strong Top-Line Growth
Total sales of $3.3 billion, up 5.9% year-over-year; same-restaurant sales growth of 4.2%, outperforming the Black Box industry benchmark by ~540 basis points for the quarter.
Negative Updates
Commodity and Beef Cost Pressure
Total commodities inflation ~5% in the quarter with food & beverage expense ~50 bps higher year-over-year, driven primarily by elevated beef costs; management cited beef as a near-term headwind and spot prices remain elevated.
Read all updates
Q3-2026 Updates
Positive
Negative
Strong Top-Line Growth
Total sales of $3.3 billion, up 5.9% year-over-year; same-restaurant sales growth of 4.2%, outperforming the Black Box industry benchmark by ~540 basis points for the quarter.
Read all positive updates
Company Guidance
Darden updated fiscal 2026 guidance to expect approximately 9.5% total sales growth for the year, about 4.5% same‑restaurant sales growth, roughly 70 new restaurant openings, commodities inflation of ~4%, an adjusted diluted net EPS of $10.57–$10.67 (including ~ $0.25 from a 53rd week) and an effective tax rate of ~12.5%; for Q4 the company sees total sales growth of 13.0%–14.5% (includes the extra week), same‑restaurant sales of 3.5%–5.0% and adjusted diluted EPS of $3.59–$3.69 (with Q4 beef fixed‑price coverage of ~80%–85%); looking to fiscal 2027, management expects to open 75–80 new restaurants (plus conversion of 14 Bahama Breeze sites), roughly $850M of capital spending (~$475M for new restaurants, ~$25M for conversions, ~$350M for maintenance/refresh/technology), an effective tax rate of ~13.5% and total interest expense of about $200M.Darden Restaurants Financial Statement Overview
Summary
Income Statement
82
Very Positive
Balance Sheet
56
Neutral
Cash Flow
74
Positive
| 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 | 5.62B | 2.64B | 2.43B | 2.11B | 2.00B | 1.49B |
| EBITDA | 1.98B | 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 | 248.50M | 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 | -701.50M | -1.28B | -1.32B | -568.40M | -389.00M | -263.70M |
| Financing Cash Flow | -1.02B | -385.80M | -483.40M | -1.03B | -1.61B | -478.90M |
Darden Restaurants Technical Analysis
Negative
190.63
Price Trends
205.10
Negative
195.68
Negative
196.64
Negative
Market Momentum
-3.38
Positive
38.39
Neutral
30.47
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 190.63 is below the 20-day moving average (MA) of 199.18, below the 50-day MA of 205.10, and below the 200-day MA of 196.64, indicating a bearish trend. The MACD of -3.38 indicates Positive momentum. The RSI at 38.39 is Neutral, neither overbought nor oversold. The STOCH value of 30.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DRI.
Darden Restaurants Risk Analysis
Darden Restaurants disclosed 34 risk factors in its most recent earnings report. Darden Restaurants reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Darden Restaurants Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $16.95B | 18.45 | 16.41% | 1.98% | 3.29% | 6.72% | |
71 Outperform | $21.83B | 20.24 | 50.71% | 3.06% | 8.61% | 9.39% | |
67 Neutral | $10.54B | 32.67 | 28.20% | 1.63% | 14.40% | 12.45% | |
65 Neutral | $43.38B | 26.98 | -20.57% | 1.84% | 11.60% | -4.33% | |
64 Neutral | $6.46B | 13.13 | 134.24% | ― | 23.18% | 138.17% | |
64 Neutral | $34.88B | 50.42 | 23.08% | 3.60% | 16.82% | -29.91% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% |
* Consumer Cyclical Sector Average
DRI
Darden Restaurants
190.63
0.01
<0.01%
EAT
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148.41
2.12
1.45%
TXRH
Texas Roadhouse
159.94
-3.45
-2.11%
YUM
Yum! Brands
156.93
14.23
9.97%
QSR
Restaurant Brands International
76.51
16.92
28.39%
YUMC
Yum China Holdings
47.99
2.81
6.22%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.