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Valued at a market cap of almost $19.1 billion, Darden Restaurants, Inc. (DRI) owns and operates full-service restaurants in the United States and Canada. The Orlando, Florida-based company operates more than 2100 restaurants under various brand names, including Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, and Yard House, to name a few. It is expected to announce its fiscal Q2 earnings results on Friday, Dec. 20.
Ahead of this event, analysts expect the restaurant company to report a profit of $2.06 per share, up 12% from $1.84 per share in the year-ago quarter. The company has surpassed Wall Street's earnings estimates in two of the last four quarters while missing on other two other occasions. In Q1, the company’s adjusted earnings of $1.75 missed the consensus estimates by 3.3%.
The results were primarily driven by a sharp fall in traffic, particularly in July, coupled with a 1.1% decline in blended same-restaurant sales and a weak fine dining segment marked by a 5.3% drop in fine dining segmental profit and a 6% fall in same-restaurant sales. For fiscal 2025, analysts expect DRI to report an EPS of $9.47, up 6.6% from $8.88 in fiscal 2024. This growth story continues in fiscal 2026, with EPS expected to increase another 10.8% year-over-year to $10.49.
Shares of DRI have declined 1.4% on a YTD basis, significantly underperforming both the S&P 500 Index's ($SPX) 22.3% rise and the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 12% return over the same period.
On Sep. 19, shares of DRI surged nearly 8.3% despite delivering a weaker-than-expected Q1 performance. Along with its adjusted EPS, its revenue of $2.76 billion missed the consensus estimates of $2.8 billion and increased just 1% from a year ago. However, the company’s strategic initiatives implemented to boost sales, including its partnership with Uber, might have bolstered investor confidence and led to its upward price movement.
Analysts' consensus view on Darden Restaurants’ stock is moderately optimistic, with a "Moderate Buy" rating overall. Among 27 analysts covering the stock, 16 recommend a "Strong Buy," two suggest a "Moderate Buy," eight indicate a “Hold,” and one suggests a “Moderate Sell.”
The average analyst price target for DRI is $182.85, indicating a 12.9% potential upside from the current levels.
On the date of publication, Neharika Jain 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.
