Darden Restaurants (DRI) AI Stock Analysis

• Market Cap: $24.92B
• Dividend Yield: 3.06%
• Average Volume (3M): 1.35M
• Price to Earnings (P/E): 22.7
• Beta (1Y): 0.43
• Revenue Growth: 8.61%
• EPS Growth: 9.39%
• Country: US
• Employees: 191,105
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 2.08
• Shares Outstanding: 115,139,250
• 10 Day Avg. Volume: 1,054,569
• 30 Day Avg. Volume: 1,354,370
• 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: 1.26
• Enterprise Value/Revenue: 2.50
• Enterprise Value/Gross Profit: 5.50
• Enterprise Value/Ebitda: 16.11
• 1Y Price Target: $224.35
• Price Target Upside: 3.26% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 20
• EPS Forecast (FY): 10.58
• Revenue Forecast (FY): $13.17B

• Rating: 76 Outperform
• Price Target: $245.00 ▲(12.76% Upside)
• Action: Reiterated Date: 12/19/25
• Date: Action: Reiterated 12/19/25

Darden Restaurants' strong financial performance and positive earnings call sentiment are the most significant factors driving the score. The company's strategic expansion and robust cash flow generation support its growth prospects. However, technical indicators suggest caution due to potential overbought conditions, and the high debt-to-equity ratio remains a risk factor.

Positive Factors

Free cash flow generation

Sustained FCF growth and strong cash conversion provide durable capital to fund new restaurant openings, dividends, and buybacks while buffering against cost shocks. Reliable cash generation supports strategic reinvestment and shareholder returns over the next several quarters.

Robust margins and profitability

High gross and healthy operating margins reflect purchasing scale, menu pricing power, and cost management across brands. Margin durability from economies of scale and menu mix helps sustain earnings even if top-line growth moderates over a 2-6 month horizon.

Same-store sales growth & expansion

Consistent same-restaurant sales outperformance plus an aggressive, executable rollout plan expands the revenue base and enhances unit-level economics. Successful promotions and openings indicate repeatable growth drivers that support structural revenue expansion.

Negative Factors

High leverage

Substantial leverage increases interest and refinancing risk, reducing financial flexibility to invest or absorb shocks. In a rising-rate or cyclical downturn environment, high debt levels could constrain capital allocation and pressure margins over the medium term.

Commodity cost pressure

Sustained high beef and commodity prices erode profitability for steak and fine-dining concepts. Persistent commodity volatility forces either margin compression or price increases that can pressure traffic, making margin recovery dependent on sourcing or pricing strategies.

Labor cost challenges

Ongoing wage inflation and tight labor markets raise operating costs across units. Even with productivity gains, structurally higher labor expenses can compress unit economics and require sustained efficiency improvements or pricing power to protect margins long term.

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 Restaurants generates revenue primarily through the operation of its restaurants, where it earns income from food and beverage sales. Each of its brands has a distinct market positioning that caters to different customer demographics, allowing for a broad customer base. Additionally, the company benefits from economies of scale in purchasing and supply chain management, which helps to control costs and maximize profit margins. Darden also engages in strategic partnerships with food suppliers and distributors, enhancing its ability to provide quality ingredients while managing expenses. Seasonal promotions, loyalty programs, and effective marketing strategies further drive customer traffic and sales, contributing significantly to the company's overall earnings.

Darden Restaurants Financial Statement Overview

Summary

Darden Restaurants shows strong revenue growth and profitability with a robust gross profit margin of 45.49%. However, the high debt-to-equity ratio of 3.08 poses a risk, despite strong cash flow generation supporting financial flexibility.

Income Statement

Darden Restaurants has demonstrated strong revenue growth with a TTM increase of 1.72% and consistent profitability, evidenced by a solid net profit margin of 8.92% and an EBIT margin of 8.72%. The gross profit margin is robust at 45.49%, indicating effective cost management. However, there is a slight decline in EBIT margin compared to the previous annual report, suggesting potential cost pressures.

Balance Sheet

The company exhibits a high debt-to-equity ratio of 3.08, indicating significant leverage, which could pose risks in a rising interest rate environment. However, the return on equity is strong at 50.89%, reflecting efficient use of equity capital. The equity ratio stands at 16.07%, suggesting a moderate reliance on equity financing.

Cash Flow

Darden Restaurants shows a healthy free cash flow growth rate of 22.44% TTM, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 1.51, highlighting efficient cash conversion. The free cash flow to net income ratio of 0.91 suggests that a significant portion of earnings is being converted into free cash flow, supporting potential reinvestment or shareholder returns.

Breakdown	TTM	May 2025	May 2024	May 2023	May 2022	May 2021
Income Statement
Total Revenue	12.58B	12.08B	11.39B	10.49B	9.63B	7.20B
Gross Profit	5.72B	2.64B	2.43B	2.11B	2.00B	1.49B
EBITDA	1.95B	1.88B	1.78B	1.60B	1.53B	992.60M
Net Income	1.12B	1.05B	1.03B	981.90M	952.80M	629.30M
Balance Sheet
Total Assets	12.94B	12.59B	11.32B	10.24B	10.14B	10.66B
Cash, Cash Equivalents and Short-Term Investments	224.10M	240.00M	194.80M	367.80M	420.60M	1.21B
Total Debt	6.41B	6.23B	5.43B	4.79B	4.89B	5.76B
Total Liabilities	10.86B	10.28B	9.08B	8.04B	7.94B	7.84B
Stockholders Equity	2.08B	2.31B	2.24B	2.20B	2.20B	2.81B
Cash Flow
Free Cash Flow	1.36B	1.04B	983.60M	951.80M	857.00M	924.90M
Operating Cash Flow	1.70B	1.71B	1.61B	1.55B	1.26B	1.19B
Investing Cash Flow	-702.90M	-1.28B	-1.32B	-568.40M	-389.00M	-263.70M
Financing Cash Flow	-999.60M	-385.80M	-483.40M	-1.03B	-1.61B	-478.90M

Darden Restaurants Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 217.27
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRI, the sentiment is Positive. The current price of 217.27 is above the 20-day moving average (MA) of 208.69, above the 50-day MA of 199.60, and above the 200-day MA of 197.26, indicating a bullish trend. The MACD of 4.72 indicates Negative momentum. The RSI at 61.30 is Neutral, neither overbought nor oversold. The STOCH value of 59.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DRI.

Darden Restaurants Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DRI	76 Outperform	$24.92B	22.68	54.10%	3.06%	8.61%	9.39%
YUMC	75 Outperform	$20.06B	22.11	16.73%	1.98%	3.29%	6.72%
YUM	74 Outperform	$45.23B	29.35	―	1.84%	11.60%	-4.33%
EAT	68 Neutral	$6.89B	15.21	177.80%	―	23.18%	138.17%
TXRH	68 Neutral	$12.36B	28.54	28.77%	1.63%	14.40%	12.45%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
QSR	61 Neutral	$32.59B	29.30	26.75%	3.60%	16.82%	-29.91%