Darden Earnings: Decent Results but Tepid Guidance; Shares Fairly Priced

Narrow-moat Darden Restaurants' slowing traffic and worse-than-expected outlook for fiscal 2025 underpin a planned mid-single-digit haircut to our $149 fair value estimate for the full-service restaurant operator despite decent fiscal fourth-quarter results. We consider the shares to be fairly valued despite a small uptick in intraday trading June 20, with the market reaction suggesting that some had expected results to be even worse, given the challenging US restaurant environment.