Darden Restaurants (DRI) AI Stock Analysis

• Market Cap: $23.88B
• Dividend Yield: 2.75%
• Average Volume (3M): 1.47M
• Price to Earnings (P/E): 23.0
• Beta (1Y): 0.53
• Revenue Growth: 5.00%
• EPS Growth: 3.73%
• Country: US
• Employees: 191,105
• Sector: Consumer Cyclical
• Sector Strength: 76
• Industry: Restaurants
• EPS (TTM): 2.80
• Shares Outstanding: 117,026,245
• 10 Day Avg. Volume: 2,265,907
• 30 Day Avg. Volume: 1,470,797
• PEG Ratio: 13.85
• Price to Book (P/B): 10.56
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 22.56
• Enterprise Value/Market Cap: 1.22
• Enterprise Value/Revenue: 0.63
• Enterprise Value/Gross Profit: 7.42
• Enterprise Value/Ebitda: 3.99
• 1Y Price Target: $213.18
• Price Target Upside: 4.49% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 23

• Rating: 75 Outperform
• Price Target: ―

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

Marketing and Promotions

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.

Partnerships

The rollout of UberDirect at Olive Garden was completed, with early results suggesting 40-50% incrementality.

Negative Factors

Consumer Sentiment

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

Valuation

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., headquartered in Orlando, Florida, is a premier full-service dining company operating multiple restaurant brands. The company owns and manages a diverse portfolio of restaurant chains, including Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, and Eddie V's. Darden is renowned for offering a wide range of dining experiences, from casual to fine dining, and is committed to delivering exceptional culinary experiences and hospitality across all its brands.

How the Company Makes Money

Darden Restaurants generates revenue primarily through the operation of its restaurant chains. The company's income is driven by sales of food and beverages at its numerous locations, with a significant emphasis on providing quality dining experiences that encourage repeat customer visits. Key revenue streams include in-restaurant dining, takeout, and delivery services. Darden leverages its strong brand portfolio to attract a broad customer base, which contributes to steady foot traffic and sales. Additionally, the company benefits from economies of scale in procurement and efficient supply chain management, enhancing profitability. Strategic marketing initiatives and loyalty programs also play a role in driving revenue growth by increasing brand visibility and customer retention.

Darden Restaurants Financial Statement Overview

Summary

Darden Restaurants demonstrates strong financial health with robust revenue and profit growth, efficient cost management, and solid cash generation. The balance sheet reflects moderate leverage but is offset by a high Return on Equity and consistent cash flow generation.

Income Statement

Darden Restaurants shows strong revenue growth with a notable increase in Total Revenue from $11.39B to $11.76B TTM, reflecting a healthy Revenue Growth Rate of 3.26%. Gross Profit Margin improved significantly to 33.31% TTM, indicating efficient cost management. Net Profit Margin also saw a positive trend, reaching 8.96% TTM, showcasing solid profitability. EBIT and EBITDA Margins of 11.81% and 15.91% respectively underline robust operational performance.

Balance Sheet

The company's balance sheet is stable, with a Debt-to-Equity Ratio of 2.76, indicating a moderate level of leverage. The Equity Ratio remains consistent at 17.54% TTM, suggesting a solid equity base. Return on Equity stood at 47.84% TTM, showcasing strong profitability relative to shareholder equity, although the high leverage might pose a risk in volatile markets.

Cash Flow

Darden Restaurants demonstrates healthy cash flow metrics with a Free Cash Flow Growth Rate of 3.56% TTM, indicating strong cash generation capabilities. Operating Cash Flow to Net Income Ratio of 1.59 and Free Cash Flow to Net Income Ratio of 0.98 underline efficient conversion of income into cash, supporting liquidity and potential for reinvestment or debt reduction.

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
1.67B	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: Positive
• Last Price: 204.02
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRI, the sentiment is Positive. The current price of 204.02 is above the 20-day moving average (MA) of 203.20, above the 50-day MA of 199.97, and above the 200-day MA of 177.46, indicating a bullish trend. The MACD of 1.90 indicates Positive momentum. The RSI at 52.36 is Neutral, neither overbought nor oversold. The STOCH value of 29.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DRI.

Darden Restaurants Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TXRH	76 Outperform	$12.52B	29.10	33.55%	1.33%	15.09%	31.24%
DRI	75 Outperform	$23.88B	23.02	48.22%	2.75%	5.00%	3.73%
CAKE	73 Outperform	$2.59B	16.43	46.60%	2.06%	4.42%	48.23%
EAT	72 Outperform	$6.62B	20.56	314.08%	―	19.80%	117.96%
YUM	67 Neutral	$40.43B	29.00	-19.43%	1.87%	10.09%	-11.50%
PZZA	62 Neutral	$1.38B	17.90	-20.16%	4.33%	-2.77%	4.01%
Sector *	62 Neutral	$6.84B	11.22	2.83%	3.93%	2.65%	-21.93%

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.