Darden Restaurants Hits New Stock High Amid Strong Growth in Casual Dining

Shares of Darden Restaurants, Inc. (DRI) are on the rise, reaching a new 52-week high of $188.94 before closing at $188.66. The increase has drawn attention from investors looking to benefit from its strong casual dining performance.

Darden’s Performance Outshines Competitors

Darden’s success can be attributed to its diverse brand portfolio and operational efficiency. Over the past three months, DRI has outperformed rivals such as Chipotle Mexican Grill, Inc. (CMG), McDonald’s Corporation (MCD), and El Pollo Loco Holdings, Inc. (LOCO). DRI shares soared by 14.5%, contrasting with a 0.7% decline in the Zacks Retail – Restaurants industry.

As the stock trades at a heightened level, investors now face an important choice: invest to capitalize on the momentum or wait for a potential market dip. Understanding Darden’s recent performance, strategic actions, and outlook is essential for making an informed decision.

DRI’s Three-Month Price Performance

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Key Drivers Behind DRI’s Growth

Darden reported an impressive second quarter for fiscal 2025, achieving total sales of $2.9 billion—up 6% from the previous year. The growth was supported by a 2.4% increase in same-restaurant sales, the acquisition of 103 Chuy’s restaurants in October, and the opening of 39 new locations.

The company’s popular chain, Olive Garden, continues to thrive, aided by the “Never Ending Pasta Bowl” promotion that boosted sales. This initiative led to the highest refill rates and increased protein add-ons compared to last year. Furthermore, Olive Garden is piloting an Uber Direct program in about 100 restaurants, which is expected to enhance delivery capabilities without immediate promotion and roll out fully by the end of the third quarter.

LongHorn Steakhouse also exceeded projections with a significant 10.4% rise in sales, propelled by a 7.5% increase in same-restaurant sales. This performance was bolstered by quality initiatives like the Steak Cutter Summit, ensuring top-tier quality standards were met. Consequently, LongHorn achieved record levels of perfectly grilled steaks.

Yard House has successfully promoted trendy menu items, such as Bratwurst sliders during Oktoberfest, which enhanced sales performance. Meanwhile, Cheddar’s has utilized Darden’s buying power to offer appealing promotions like the Texas T-bone, gaining recognition for affordability.

Future Insights for Darden

The acquisition of Chuy’s is a pivotal development, expanding Darden’s reach and boosting operational efficiencies. The integration aims to honor Chuy’s unique charm and consistently deliver quality guest experiences.

Additionally, Darden is implementing a new proprietary point-of-sale system across its brands to streamline operations and improve analytics. This technological advancement aims to foster Darden’s competitive edge through better data insights and operational effectiveness.

Positive Updates on Financial Guidance

Darden’s fiscal 2025 guidance has been revised upward, now forecasting total sales of approximately $12.1 billion—with $300 million projected from Chuy’s—up from an earlier estimate of $11.8–$11.9 billion. The company plans to open 50–55 net new restaurants, a slight increase from the previous guidance of 45–50.

Capital expenditures have also been adjusted to about $650 million, reflecting costs related to the Chuy’s acquisition and other strategic goals, up from the prior estimate of $550–$600 million. Encouragingly, the revised inflation forecast is now around 2.5%, improved from the earlier 3% estimate, indicating a more favorable outlook for expenses.

Darden is holding steady with its adjusted diluted earnings per share (EPS) outlook for fiscal 2025 at $9.40–$9.60, reflecting confidence in navigating costs while remaining profitable. The updated guidance portrays a more assertive growth strategy despite inflationary challenges, positioning Darden for sustained success.

The Zacks Consensus Estimate for DRI’s EPS has increased by 0.4% for fiscal 2025 and 1.3% for 2026 over the last two months, signifying heightened confidence from analysts.

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Key Technical and Valuation Metrics

Technical analysis suggests a positive outlook for DRI. Currently, the stock is trading above both its 50-day moving average of $168.23 and its 200-day moving average of $155.64, signaling strong market confidence in Darden’s financial health.

DRI Stock Performance Compared to Moving Averages

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Furthermore, with a forward 12-month price-to-earnings ratio of 18.65X, DRI appears attractively priced compared to the industry average of 25.62X, making it a potential investment opportunity.

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Conclusion and Outlook

Darden continues to leverage its diverse portfolio and operational prowess, positioning itself well for future growth. Investors should closely monitor DRI as it navigates its strategic initiatives.