Darden Restaurants (DRI) Stock Forecast & Price Target

Darden Restaurants demonstrated strong financial performance in fiscal 2025, achieving consolidated revenues of $12.1 billion and a 7.3% year-over-year increase in total sales to $3.10 billion for the second quarter of fiscal 2026, driven by a 4.3% blended same restaurant sales print. The company reported a 1.7% increase in same restaurant traffic, bolstered by a robust performance during the holiday season, contributing to an overall traffic increase of 2.8% when accounting for catering. Furthermore, the Other Business segment showcased remarkable growth, with sales rising 11.3% to $647 million, indicating strong market positioning and consumer demand across Darden's diverse portfolio of 11 restaurant brands.

Darden Restaurants faces a negative outlook due to several financial challenges, including a reported adjusted EPS of $2.08, which fell slightly short of estimates due to a 5.5% inflation in beef prices that contracted restaurant margins by 90 basis points. The company's segment margin for LongHorn, while strong in sales performance, was negatively impacted by pricing strategies that lagged behind inflation, leading to pressure on overall profitability and a restaurant-level margin of 20.3%, below the expected 20.8%. Additionally, ongoing integration issues from recent acquisitions and significant external economic pressures, such as declining retail demand for steak and potential operational volatility from recessionary factors, pose further risks to Darden's earnings and growth potential.