Darden Restaurants, Inc. (DRI)
Valuation Overview•Is Darden Restaurants, Inc. Overvalued or Undervalued?
The market is pricing the stock in line with historical averages, assuming steady-state growth.
Moderate quality score of 56/100, reflecting stable operating margins and manageable leverage.
Wall Street forecasts a balanced outlook with consensus price targets near the current price.
Verdict: Average quality business weighed down by significant solvency concerns.
Wall Street is broadly bullish, projecting solid upside alongside robust expected earnings growth. This is paired with healthy capital returns, driven by a balanced mix of reliable dividends and share buybacks.
DRI demonstrates strong business quality with robust profitability and healthy margins. However, the balance sheet carries elevated leverage, requiring careful monitoring of debt servicing capabilities.
The company demonstrates solid revenue growth (7.8% 3Y CAGR) paired with stable bottom-line earnings. Operating efficiency remains adequate with margins around 11.6%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $3.3B | +6.0% | +7.8% | +9.1% | +6.0% | |
| EBITDA | $582.1M | — | +7.1% | — | — | |
| Net Income | $306.8M | +2.1% | +3.3% | — | +4.0% | |
| EPS (Diluted) | $2.65 | +4.1% | +6.2% | — | +4.9% | |
| Free Cash Flow | $623.3M | +5.2% | +6.5% | +36.6% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 44.0% | 21.1% | 21.0% | 21.0% |
| Operating Margin | 11.6% | 11.4% | 11.1% | 9.4% |
| Net Margin | 8.7% | 9.0% | 9.1% | 7.3% |
| FCF Margin | 12.3% | 8.8% | 9.6% | 8.3% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q1'26Latest | $2.94 | $2.95 | +0.3% | ||
| Q4'25 | $2.10 | $2.08 | -1.0% | ||
| Q3'25 | $2.00 | $1.97 | -1.5% | ||
| Q2'25 | $2.97 | $2.98 | +0.3% | ||
| Q1'25 | $2.80 | $2.80 | +0.0% | ||
| Q4'24 | $2.02 | $2.03 | +0.5% | ||
| Q3'24 | $1.83 | $1.75 | -4.4% | ||
| Q2'24 | $2.61 | $2.65 | +1.5% |
Total return is -1.5% (1Y), lagging the benchmark by -26.5%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +15.6% | +6.3% | — |
| 1Y | -1.5% | -26.5% | +2.7% |
| 3YCAGR | +11.6% | -8.3% | +10.2% |
| 5YCAGR | +13.0% | 0.0% | +20.0% |
| 10YCAGR | +14.0% | +0.3% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Darden Restaurants, Inc. (DRI) valuation, health, and returns.
Darden Restaurants, Inc. is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Fair versus peers compared to industry peers. trading near fair value (DCF: $231.09)
Darden Restaurants, Inc. has multiple valuation anchors: DCF Intrinsic Value: $231.09 | Peer Relative Fair Value: $211.61 | Wall Street Analyst Target: $230.14 (implying +7.8% upside). A convergence of these signals offers higher conviction.
Darden Restaurants, Inc. displays fair financial health with a composite quality score of 56/100, supported by a Altman Z-Score of 2.0 (grey zone), Piotroski F-Score of 6/9, Return on Invested Capital (ROIC) of 13.0%.
Darden Restaurants, Inc. pays a 2.6% dividend yield, covered by a 63% payout ratio with 5 years of growth, supplemented by a 1.7% buyback yield.
Darden Restaurants, Inc.'s current growth trajectory is Stable. The company achieved +6.0% 1Y revenue growth and +4.1% 1Y EPS growth, compared to its 3Y revenue CAGR of +7.8%.
Wall Street consensus is Buy based on 59 analysts, beating EPS expectations in 58% of recent quarters with a 1-quarter streak. The consensus price target represents a +7.8% change from current levels.
Investment risks for Darden Restaurants, Inc. include: -25.1% 1-year max drawdown. Volatility risk is characterized by a beta of 0.31x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.