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Darden Restaurants, Inc. (DRI) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Darden Restaurants, Inc. (DRI)

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Intrinsic Value (DCF)

Current$206.55
→
Intrinsic$205.34
-1%
$123.81$205.34$360.15
Market implies 20% growth for 5 years
DRI appears fairly valued — current price aligns with our DCF estimate.
At $207, the market prices in continued high-teens cash flow growth (20%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $124 → Bull $360. Current price implies expectations near the base case.
Discount ↓Growth →16%18%20%22%
8%$261$287$315$345
10%$169$186$205$226
12%$117$131$145$160
14%$85$95$106$118

Bull Case

  • Bull case ($360) offers 74% upside at 24% growth, 9% discount

Bear Case

  • Bear case ($124) implies 40% downside at 16% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$1.24B
Year 2$1.49B
Year 3$1.79B
Year 4$2.15B
Year 5$2.58B
Terminal$37.90B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.04BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is DRI stock undervalued or overvalued?
🟡 FAIRLY VALUED

DRI trades at $206.55, within 10% of our $205.34 intrinsic value estimate. At 10.0% WACC and 20.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $117.28 (bear) to $335.03 (bull).

What is DRI's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.04B, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $5.99B net debt and dividing by 0.12B shares: Bear $117.28 | Base $205.34 | Bull $335.03. Current price $206.55 implies +3% to base case.

How is DRI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($30.30B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.