Darden Restaurants (DRI) AI Stock Analysis

• Market Cap: $22.98B
• Dividend Yield: 2.95%
• Average Volume (3M): 1.44M
• Price to Earnings (P/E): 22.2
• Beta (1Y): 0.56
• Revenue Growth: 5.00%
• EPS Growth: 3.73%
• Country: US
• Employees: 191,105
• Sector: Consumer Cyclical
• Sector Strength: 55
• Industry: Restaurants
• EPS (TTM): 8.86
• Shares Outstanding: 117,026,245
• 10 Day Avg. Volume: 1,408,833
• 30 Day Avg. Volume: 1,444,803
• PEG Ratio: 5.94
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.02
• Price to Cash Flow (P/CF): 15.10
• P/FCF Ratio: 27.50
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $213.27
• Price Target Upside: 8.62% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 23

Darden Restaurants scores well overall due to its strong financial performance, optimistic earnings guidance, and strategic expansion plans. While the technical analysis shows mixed momentum, the company's robust profitability and cash generation capabilities provide a solid foundation for future growth. Valuation metrics are reasonable, making it an attractive investment in the restaurant industry.

Positive Factors

Market Positioning

Value for money positioning is expected to continue contributing to Longhorn’s same-store sales growth in a consumer-conscious environment.

Sales Growth

Pent-up demand and promotions like Buy-One, Get-One at Olive Garden, along with the Uber Direct delivery partnership, are expected to drive a strong finish to the fiscal year for Darden Restaurants.

Strategic Initiatives

Near-term initiatives like increases in ad spends, product (re)introductions, and UberDirect partnership rollouts across all Olive Garden stores are reasons to be optimistic.

Negative Factors

Consumer Sentiment

There is a lack of confidence that the full service rebound will persist due to soft consumer sentiment data.

Macroeconomic Uncertainty

Visibility into incremental upside is somewhat limited under an uncertain macroeconomic and consumer backdrop.

Valuation Concerns

The current valuation reflects an overly optimistic view of relative near-term traffic and same-store sales acceleration.

Darden Restaurants Business Overview & Revenue Model

Company Description

Darden Restaurants, Inc., through its subsidiaries, owns and operates full-service restaurants in the United States and Canada. As of May 29, 2022, it owned and operated 1,867 restaurants, which included 884 under the Olive Garden brand, 546 under the LongHorn Steakhouse brand name, 172 under the Cheddar's Scratch Kitchen brand, 85 under the Yard House brand name, 62 under The Capital Grille brand, 45 under the Seasons 52 brand name, 42 under the Bahama Breeze brand, 28 under the Eddie V's Prime Seafood brand name, and 3 under the Capital Burger brand; and franchised 60 restaurants comprising 35 under the Olive Garden brand, 18 under the LongHorn Steakhouse brand name, 4 under the Cheddar's Scratch Kitchen brand, 2 under The Capital Grille brand name, and 1 under the Bahama Breeze brand.Darden Restaurants, Inc. was founded in 1968 and is based in Orlando, Florida.

How the Company Makes Money

Darden Restaurants generates revenue primarily through the operation of its diverse portfolio of restaurant brands. The company makes money by selling food and beverages to customers dining in their restaurants, with Olive Garden and LongHorn Steakhouse being significant contributors due to their extensive presence and popularity. Additionally, Darden benefits from take-out and delivery sales, which have become increasingly important revenue streams, especially during periods when in-restaurant dining faces restrictions or decreased consumer preference. Darden also leverages its scale to negotiate favorable terms with suppliers, optimizing cost-efficiency and maintaining competitive pricing. Furthermore, the company continually invests in marketing and customer loyalty programs to drive repeat business and attract new customers, enhancing overall revenue growth.

Darden Restaurants Financial Statement Overview

Summary

Darden Restaurants showcases strong financial performance with consistent revenue and profit growth. The company maintains operational efficiency and strong cash flow generation, effectively managing leverage in the Restaurants & Bars industry.

Income Statement

The income statement shows a strong performance with consistent revenue growth from $9.63 billion in 2022 to $11.58 billion in TTM 2024. Gross profit margin and net profit margin have remained robust. The TTM net profit margin is approximately 9%, indicating effective cost management. EBIT and EBITDA margins are stable, reflecting operational efficiency.

Balance Sheet

The balance sheet reveals a moderate level of leverage, with a debt-to-equity ratio above 3. However, the equity ratio has slightly improved over the years, showing a stable capital structure. Return on equity is strong at around 50% in TTM 2024, indicating effective utilization of shareholder funds.

Cash Flow

Cash flow analysis indicates healthy cash generation with increasing free cash flow over the years. The operating cash flow to net income ratio is strong, demonstrating efficient cash operations. Consistent positive free cash flow growth supports the company's ability to reinvest and reduce debt.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
11.76B	11.39B	10.49B	9.63B	7.20B	7.81B
	Gross Profit
3.92B	2.41B	2.08B	2.00B	1.49B	1.41B
	EBIT
1.39B	1.31B	1.20B	1.16B	648.70M	828.30M
	EBITDA
1.87B	1.78B	1.59B	1.54B	993.40M	257.00M
	Net Income Common Stockholders
1.05B	1.03B	981.90M	952.80M	629.30M	-49.20M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
224.20M	194.80M	367.80M	420.60M	1.21B	763.30M
	Total Assets
12.56B	11.32B	10.24B	10.14B	10.66B	9.95B
	Total Debt
6.08B	5.43B	4.55B	4.86B	5.02B	5.48B
	Net Debt
5.86B	5.23B	4.18B	4.44B	3.80B	4.71B
	Total Liabilities
10.36B	9.08B	8.04B	7.94B	7.84B	7.61B
	Stockholders Equity
2.20B	2.24B	2.20B	2.20B	2.81B	2.33B
Cash Flow		Free Cash Flow
1.03B	993.40M	951.80M	857.00M	924.90M	217.30M
	Operating Cash Flow
1.68B	1.62B	1.55B	1.26B	1.19B	711.30M
	Investing Cash Flow
-1.27B	-1.32B	-568.40M	-389.00M	-263.70M	-544.00M
	Financing Cash Flow
-448.80M	-483.40M	-1.03B	-1.61B	-478.90M	138.70M

Darden Restaurants Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 196.35
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRI, the sentiment is Neutral. The current price of 196.35 is below the 20-day moving average (MA) of 197.90, below the 50-day MA of 196.38, and above the 200-day MA of 169.31, indicating a neutral trend. The MACD of 4.29 indicates Negative momentum. The RSI at 64.91 is Neutral, neither overbought nor oversold. The STOCH value of 84.62 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DRI.

Darden Restaurants Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CMG	77 Outperform	$69.03B	45.71	45.67%	―	14.61%	25.68%
DRI	75 Outperform	$22.98B	22.15	48.22%	2.95%	5.00%	3.73%
YUM	73 Outperform	$40.51B	27.90	-19.43%	1.92%	6.68%	-7.09%
EAT	68 Neutral	$6.07B	23.08	2390.91%	―	13.67%	69.41%
DPZ	68 Neutral	$15.65B	27.34	-14.74%	1.46%	5.07%	13.74%
BJRI	67 Neutral	$739.48M	47.74	4.54%	―	1.81%	-15.53%
Sector *	59 Neutral	$11.74B	10.16	-1.06%	4.15%	1.27%	-16.61%

Darden Restaurants Corporate Events

Darden Restaurants Announces Board Member Retirement

On January 27, 2025, Nana Mensah announced his retirement from the Board of Directors of Darden Restaurants, Inc., effective the following day. His decision to step down is not due to any disagreements with the company’s operations, policies, or practices, and the company expressed appreciation for his service.