Darden Restaurants (DRI) is set to release its first quarter of Fiscal 2025 financials on September 19. Wall Street analysts expect the company to post Q1 earnings of $1.83 per share, an increase of 2.8% year-over-year. Additionally, they expect DRI’s revenue to increase 2.6% from the previous year to $2.80 billion, according to TipRanks data.
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Darden Restaurants is one of the players in the casual dining sector, operating well-known chains like Olive Garden, LongHorn Steakhouse, and Cheddar’s Scratch Kitchen.
It’s important to highlight that the company has surpassed the consensus EPS estimates in seven out of the last nine quarters.
Key Takeaways from TipRanks’ Bulls & Bears Tool
Analysts expect revenues and earnings to increase in Q1, signaling optimism for DRI’s near-term performance.
Also, according to TipRanks’ Bulls Say, Bears Say tool shown below, bulls believe that DRI will continue to gain market share despite a challenging consumer environment. They point to the strategic acquisition of Chuy’s, which adds 101 Mexican restaurants to Darden’s portfolio. They also justify Darden’s premium valuation by emphasizing Olive Garden’s strong same-store sales performance.
However, it is important to consider the risks surrounding DRI’s future performance. Bears pointed out that Chuy’s acquisition might distract from core operations and divert funds from shareholder returns. They also remained concerned about declining sales and traffic due to economic conditions, along with skepticism about achieving the projected 1%-2% same-store sales growth.
Options Traders Anticipate a Minor Move
Using TipRanks’ Options tool, we can gauge options traders’ expectations for the stock post-earnings report. Based on a $135 strike price, with call options priced at $23.23 and put options at $0.15, the expected price movement, based on the at-the-money straddle is 4.39%.
Is DRI a Good Stock to Buy?
On TipRanks, DRI stock has a Moderate Buy consensus rating based on 14 Buy, seven Hold, and one Sell recommendations. Also, the average DRI price target of $168.63 implies nearly 5% upside potential from current levels. Meanwhile, DRI shares have gained nearly 11% over the past year.
