DARDEN RESTAURANTS INC (DRI)

Price—Loading quote

AI: Overvalued

Price checkThe current price leaves little room for slower growth or weaker restaurant spending.

At $225.26, Darden costs 21.7 times fiscal 2026 diluted earnings of $10.38 and about 20.1 times management’s $11.10–$11.35 fiscal 2027 forecast midpoint. Fiscal 2026 free cash flow—cash remaining after operations and capital spending—was approximately $1.12 billion, or $9.81 per share, equivalent to only 4.4% of the share price. My inference is that this premium price already assumes continued sales growth, stable restaurant profitability and successful expansion, supporting an Overvalued verdict despite the company’s quality.

Big pictureSales, earnings and cash have grown steadily, but restaurant demand remains economically sensitive.

Revenue rose from $7.20 billion in fiscal 2021 to $13.21 billion in 2026, while operating income increased from $649 million to $1.58 billion. Operating cash flow climbed every year, reaching $1.85 billion; after $734 million of capital spending, roughly $1.12 billion remained. Fiscal 2026 benefited from an extra operating week, which added 2.1 percentage points to sales growth and $0.25 to earnings per share. Full-service dining is still cyclical because customers can reduce visits when household budgets tighten.

Business strengthStrong brands and manageable debt support resilience, though shareholder payments exceeded recent spare cash.

Olive Garden and LongHorn produced about 68% of fiscal 2026 sales, with LongHorn’s same-restaurant sales rising 7.2%. Net debt was $1.42 billion, only about two-thirds of annual earnings before interest, taxes, depreciation and amortization, although lease obligations add substantial fixed rent commitments. Shares outstanding fell 12.8% from fiscal 2021, so buybacks more than offset employee stock awards. However, fiscal 2026 dividends and buybacks totaled $1.36 billion, roughly $246 million above free cash flow, limiting the safety of repeating that pace.

What could change the storyFaster store growth could justify the price, while weaker visits would expose its premium.

The strongest bull case is that 75–80 planned openings, LongHorn’s momentum and 2.5%–3.5% same-restaurant sales growth lift fiscal 2027 earnings toward or above $11.35 per share despite losing fiscal 2026’s extra week. The bear case is that weaker customer visits or costs above management’s 3% inflation assumption compress restaurant profits while $875 million of planned capital spending reduces spare cash. My valuation concern would ease if earnings materially exceed guidance; sales growth below 2.5% or earnings below $11.10 would strengthen it.

$225.26 price considered

AI: News

Strong fourth-quarter finishRestaurant sales and earnings grew strongly, but an extra week inflated the headline comparison.

On June 25, 2026, Darden reported fourth-quarter sales of $3.72 billion, up 13.7%; an extra week supplied 7.6 percentage points of that increase. Same-restaurant sales rose 4.6%, while adjusted earnings reached $3.66 per share, up 22.8%. Management forecast fiscal 2027 earnings of $11.10–$11.35 per share. The stock closed 0.32% lower that day and 0.45% higher the next; that muted pattern does not establish that earnings caused either move.

Larger shareholder returnsDarden raised its dividend and approved substantial buybacks, increasing returns but also cash demands.

On June 25, 2026, Darden raised its quarterly dividend 8% to $1.62 per share and disclosed a new $1.5 billion buyback authorization without an expiration date. The authorization equals roughly 5.9% of the company’s August 14 market value, though authorization does not guarantee purchases. These actions can raise each remaining share’s claim on future earnings, but fiscal 2026 dividends and repurchases already exceeded free cash flow, making future spending discipline important.

Bahama Breeze wind-downDarden is closing or converting every Bahama Breeze location to remove an underperforming brand.

On February 3, 2026, Darden said it would permanently close 14 Bahama Breeze restaurants and convert the remaining 14 into other Darden brands over 12–18 months. Management said the plan should not materially affect financial results. The closures remove weak locations, while conversions could reuse valuable sites for stronger concepts. Fiscal 2026 results included restaurant impairment and closure costs, so investors should watch conversion spending, reopening timing and whether replacement restaurants produce better sales.

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Free cash flow

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Total cash / debt

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Financial statements

	2026	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010	2009	2008
Revenue	$13.21B	$12.08B	$11.39B	$10.49B	$9.63B	$7.20B	$7.81B	$8.51B	$8.08B	$7.17B	$6.93B	$6.76B	$6.29B	$5.92B	$5.33B	$7.50B	$7.11B	$7.22B	$6.63B
Gross profit	$2.68B	$2.47B	$2.29B	$1.99B	$1.90B	$1.40B	$1.17B	$1.59B	$1.49B	$1.33B	$1.30B	$1.18B	$1.04B	$1.06B	—	—	—	—	—
Operating income	$1.58B	$1.36B	$1.31B	$1.20B	$1.16B	$648.7M	$47.9M	$832.5M	$766.8M	$677.5M	$622.2M	$367.6M	$308.9M	$400.0M	—	—	—	—	—
EBITDAderived	$2.14B	$1.88B	$1.77B	$1.59B	$1.53B	$999.6M	$403.8M	$1.17B	$1.08B	$950.4M	$912.4M	$686.9M	$613.3M	$678.3M	—	—	—	—	—
Net income	$1.21B	$1.05B	$1.03B	$981.9M	$952.8M	$629.3M	−$52.4M	$713.4M	$596.0M	$479.1M	$375.0M	$709.5M	$286.2M	$411.9M	$475.5M	$476.3M	$404.5M	$372.2M	$377.2M
Basic EPSper diluted share	$10.45	$8.93	$8.57	$8.06	$7.46	$4.83	-$0.43	$5.78	$4.81	$3.85	$2.94	$5.56	$2.18	$3.19	$3.65	$3.48	$2.90	$2.71	$2.69
Diluted EPSper diluted share	$10.38	$8.86	$8.51	$7.99	$7.39	$4.77	-$0.43	$5.69	$4.73	$3.80	$2.90	$5.47	$2.15	$3.13	$3.57	$3.39	$2.84	$2.65	$2.60

Review source filings at SEC.gov ↗

Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys0$0.00 disclosed value

Sells (SEC code S)73$67.92M disclosed value

Transaction	Insider	Type	Shares	Price	Value	Owned after
Apr 17, 2026Form 4	Milanes Douglas J.SVP, Chief Supply Chain Ofcr	SellCommon Stock	3.6K	$202.17	$731.9K	273.97
Apr 7, 2026Form 4	Koren Lindsay L.SVP General Counsel	SellCommon Stock	300	$194.32	$58.3K	1.6K
Apr 6, 2026Form 4	Martin Melvin JohnGroup President	SellCommon Stock	5.1K	$196.04	$998.0K	17.3K
Mar 23, 2026Form 4/A	Simon William SDirector	SellCommon Stock	2.3K	$203.96	$475.8K	6.3K
Mar 23, 2026Form 4	Simon William SDirector	SellCommon Stock	2.3K	$200.64	$468.1K	6.3K

Review ownership filings at SEC.gov ↗

DARDEN RESTAURANTS INC (DRI)

Financial charts

Financial statements

Insider buys & sells