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Darden Restaurants Inc DRI

Morningstar Rating
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Stock XNYS Rating as of
$146.77 −1.56 (1.05%)
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As of Delayed Price Post-Trading: $146.77 0.00
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Company Report

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

Sean Dunlop

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.

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Price vs Fair Value

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DRI is trading at a 349% premium.
Price
$148.33
Fair Value
$399.00
Uncertainty
Low
1-Star Price
$746.74
5-Star Price
$194.60
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Darden's strong restaurant margin recovery should defend its 2%-3% annual unit growth targets even as pressure builds elsewhere in the full-service restaurant industry.

Bears

Slower full-service industry growth could result in aggressive discounting and challenges generating positive traffic in the intermediate term.

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News

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Trading Information

Previous Close Price
$148.33
Day Range
$146.53–149.00
52-Week Range
$133.36–176.84
Bid/Ask
$145.83 / $146.77
Market Cap
$17.52 Bil
Volume/Avg
1.1 Mil / 1.3 Mil

Key Statistics

Price/Earnings (Normalized)
17.16
Price/Sales
1.57
Dividend Yield (Trailing)
3.53%
Dividend Yield (Forward)
3.78%
Total Yield
5.85%

Company Profile

Darden Restaurants is the largest restaurant operator in the U.S. full-service space, with consolidated revenue of $10.5 billion in fiscal 2023 resulting in 3%-4% full-service market share (per NRA data and our calculations). The company maintains a portfolio of 10 restaurant brands: Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Ruth's Chris, Yard House, The Capital Grille, Seasons 52, Eddie V’s, Bahama Breeze, and The Capital Burger. Darden generates revenue almost exclusively from company-owned restaurants, though a small network of franchised restaurants and consumer-packaged goods sales through the traditional grocery channel contribute modestly. As of the end of its fiscal 2023, the company operated 1,914 restaurants in the U.S.
Sector
Consumer Cyclical
Industry
Restaurants
Stock Style Box
Mid Core
Total Number of Employees
187,384
Website
https://www.darden.com

Competitors

Valuation

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Metric
DRI
CMG
SBUX
Price/Earnings (Normalized)
 17.1664.7421.19
Price/Book Value
 7.8925.25—
Price/Sales
 1.578.382.42
Price/Cash Flow
 11.4048.2411.82
Price/Earnings
DRI
CMG
SBUX

Financial Strength

Metric
DRI
CMG
SBUX
Quick Ratio
 0.141.510.56
Current Ratio
 0.391.650.86
Interest Coverage
 10.31—10.40
Quick Ratio
DRI
CMG
SBUX

Profitability

Metric
DRI
CMG
SBUX
Return on Assets (Normalized)
 10.34%16.58%15.34%
Return on Equity (Normalized)
 52.88%45.82%—
Return on Invested Capital (Normalized)
 16.99%18.10%29.54%
Return on Assets
DRI
CMG
SBUX
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