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Darden Restaurants, Inc. (DRI), headquartered in Orlando, Florida, operates a portfolio of full-service restaurants across North America. Valued at a market capitalization of $19.3 billion, its well-known brands include Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Seasons 52, Capital Burger, and others.
DRI has substantially underperformed the broader market over the past year. Over the past 52 weeks, DRI surged 3.2% compared to the S&P 500 Index’s ($SPX) 31.1% returns. In 2024 alone, DRI dropped 2.1% versus SPX’s 24.1% gains on a YTD basis.
Narrowing the focus, DRI also underperformed the Advisorshares Restaurant ETF’s (EATZ) 38.8% returns over the past 52 weeks and 25.7% gains on a YTD basis.
On September 19, DRI shares jumped 8.3% despite reporting underwhelming Q1 results, which fell short of expectations for same-store sales, restaurant margins, and adjusted EPS. The positive market reaction was fueled by better quarter-to-date trends, the announcement of a new delivery partnership with Uber Technologies, Inc. (UBER), and the reaffirmation of FY25 guidance.
For the fiscal year ending in May 2025, analysts expect Darden Restaurants to report an EPS growth of 6.6% year over year to $9.47. The company’s earnings surprise history is mixed. It surpassed the consensus EPS estimates in two of the past four quarters while missing the estimates on two other occasions.
Among the 27 analysts covering the DRI stock, the consensus rating is a “Moderate Buy.” That’s based on 16 “Strong Buy” ratings, two “Moderate Buys,” eight “Holds,” and one “Moderate Sell.”
This configuration has been consistent over the past months.
On Sept. 20, Stephens analyst Jim Salera raised Darden’s price target from $159 to $164 while maintaining an “Equal-Weight” rating. Salera expressed confidence in Darden’s operational execution and margin management but believes the current valuation fairly reflects its strengths amid a challenging macroeconomic environment.
DRI’s mean price target of $182.85 represents a premium of 13.7% from current price levels. The Street-high target of $209 indicates a potential upside of 29.9%.
