Darden Restaurants Faces Tough Year Amid Positive Trends
Company Overview: Darden Restaurants, Inc. (DRI), based in Orlando, Florida, runs a range of full-service dining establishments throughout North America. With a market cap of $19.3 billion, its popular brands include Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Seasons 52, and Capital Burger.
Market Performance: Unfortunately, DRI has significantly lagged behind the overall market in the last year. In the past 52 weeks, DRI’s stock only increased by 3.2%, compared to a notable 31.1% gain by the S&P 500 Index ($SPX). This year, DRI’s stock has dropped 2.1%, while the S&P 500 has surged 24.1% year to date (YTD).
When looking at specialized restaurant tracking, DRI also fell short compared to the Advisorshares Restaurant ETF’s (EATZ) impressive growth of 38.8% over the past year and 25.7% YTD.
Recent Developments: On September 19, DRI’s shares rose by 8.3%, even after the company revealed disappointing Q1 results that did not meet projections for same-store sales, restaurant margins, and adjusted EPS. The stock increase was likely driven by more favorable trends for the quarter-to-date, a new delivery partnership with Uber Technologies, Inc. (UBER), and the reaffirmation of guidance for FY25.
Analysts predict that for the fiscal year ending in May 2025, Darden Restaurants will see an EPS growth of 6.6% compared to last year, reaching $9.47. Historically, DRI has had mixed results in meeting EPS estimates, exceeding expectations in two of the previous four quarters while failing to do so in the other two.
Analyst Insights: Among the 27 analysts who cover DRI, the consensus rating is “Moderate Buy,” including 16 “Strong Buy” ratings, two “Moderate Buys,” eight “Holds,” and one “Moderate Sell.” This sentiment has remained stable over recent months.
On September 20, Stephens analyst Jim Salera raised his price target for Darden from $159 to $164, keeping an “Equal-Weight” rating. He noted confidence in the company’s operational execution and margin management but remarked that its current valuation reasonably reflects its strengths, given the challenging economic conditions.
DRI’s average price target stands at $182.85, indicating a potential growth of 13.7% from current prices. The highest target among analysts is $209, suggesting an upside of 29.9%.
On the date of publication, Kritika Sarmah 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. More news from Barchart
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