/Darden%20Restaurants%2C%20Inc_%20Olive%20Gardern%20by-%20Sundry%20Photography%20via%20Shutterstock.jpg)
Orlando, Florida-based Darden Restaurants, Inc. (DRI) owns and operates full-service restaurants in North America. With a market cap of $17.1 billion, Darden Restaurants operates various brands, including Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Seasons 52, Capital Burger, and more.
The restaurant major has substantially underperformed the broader market over the past year. Over the past 52 weeks, DRI dropped 5.6% compared to the S&P 500 Index’s ($SPX) 28.3% returns. In 2024 alone, DRI dipped 8.9% versus SPX’s 17.6% gains on a YTD basis.
Narrowing the focus, DRI also underperformed the Advisorshares Restaurant ETF’s (EATZ) 23.6% returns over the past 52 weeks and 10.9% gains on a YTD basis.
Shares of Darden Restaurants rose 1.5% after its fiscal 2024 earnings release on Jun. 20. The company’s sales climbed 8.6% annually to $11.4 billion, and net earnings rose 4.7% to $1 billion. Moreover, the company projected the opening of 45 to 50 new restaurants in 2025.
For the fiscal year ending in May 2025, analysts expect Darden Restaurants to report an EPS growth of 6.8% year over year to $9.48. The company’s earnings surprise history is mixed. It surpassed the consensus EPS estimates in three of the past four quarters while missing the estimates on another occasion. Its EPS for the last reported quarter of $2.65 surpassed the consensus estimates by 1.2%.
Among the 25 analysts covering the DRI stock, the consensus rating is a “Moderate Buy.” That’s based on 15 “Strong Buy” ratings, two “Moderate Buys,” seven “Holds,” and one “Moderate Sell.”
This configuration is slightly less bullish than two months before, with 16 analysts recommending a “Strong Buy” and none with a “Moderate Sell” rating.
On Jul. 23, TD Cowen analyst Andrew Charles downgraded the stock to “Hold” with a price target of $150. He cited a combination of factors concerning the company's future prospects, including a lack of significant growth and unclear sales drivers in an increasingly challenging full-service restaurant industry.
DRI’s mean price target of $170.92 represents a premium of 14.2% from current price levels. The Street-high target of $192 indicates a potential upside of 28.3%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
