Darden Is Winning Share, but One Analyst Says the Stock Is Already Fairly Priced

Darden Restaurants Inc. (NYSE: DRI) stock is trading lower Friday after the company reported fiscal 2027 first-quarter results Thursday that narrowly missed Wall Street estimates for both revenue and earnings.

Revenue rose 5% year over year to $3.20 billion, missing the analyst consensus estimate of $3.206 billion. Darden reported earnings of $2.05 per share, missing the analyst consensus estimate of $2.06 per share.

Blended same-restaurant sales rose 3.1% on a fiscal calendar basis and 3.2% on a comparable calendar basis. The company reaffirmed its full-year outlook. Darden continues to expect diluted EPS from continuing operations of $11.10 to $11.35.

Here are some key analyst actions following the results. Guggenheim analyst Gregory Francfort reiterated a Buy rating and maintained a $235 price forecast. BTIG analyst Peter Saleh maintained a Buy rating and a $235 price forecast. Freedom Capital Markets analyst Lynne Collier maintained a Buy rating and raised the price forecast to $260 from $255. Stephens & Co. analyst Jim Salera reiterated an Equal-Weight rating and maintained a $220 price forecast. Mizuho analyst Nick Setyan maintained an Outperform rating and raised the price forecast to $245 from $235. Citigroup analyst Jon Tower maintained a Buy rating and lowered the price forecast to $247 from $248. BMO Capital analyst Andrew Strelzik maintained a Market Perform rating and lowered the price forecast to $220 from $225.

Guggenheim said Darden continues to gain market share as industry capacity rationalization supports larger restaurant operators. Francfort noted that management reaffirmed its inflation assumptions and EPS outlook. Traffic trends also improved during the quarter and accelerated further into September. The analyst said Darden has outperformed peer Texas Roadhouse, Inc. (NASDAQ: TXRH) over the past month as Olive Garden trends strengthened. Guggenheim sees potential upside if Olive Garden comparable sales move toward 3%. However, that scenario depends on continued strength in Darden’s other businesses, stable oil prices, contained labor and cost inflation, and further easing in steak costs. The firm maintained its estimates. It expects Darden to sustain mid-single-digit revenue growth and mid- to high-single-digit EBITDA growth.

BTIG said Darden’s 3.2% same-store sales growth on a calendar basis was broadly in line with its 2.9% estimate and Wall Street expectations. Olive Garden comparable sales rose 1%, about 50 basis points below BTIG’s forecast. LongHorn Steakhouse sales climbed 6.8%, beating the firm’s estimate by about 130 basis points, Saleh said. EPS increased 4.1% year over year to $2.05. However, it came in slightly below BTIG’s $2.08 estimate. Saleh attributed the difference to restaurant margins that were about 25 basis points below expectations and slightly higher general and administrative expenses. Menu pricing averaged 3.7% during the quarter, roughly in line with inflation across Darden’s portfolio. BTIG expects pricing to moderate toward the low-to-mid 2% range by year-end. It forecasts commodity inflation of about 3% for the full year.

Freedom Capital Markets described Darden’s fiscal first-quarter 2027 performance as solid. Revenue was in line with its expectations, while EPS came in 11 cents above its estimate despite temporary headwinds at Olive Garden. All operating segments posted positive comparable sales, led by LongHorn Steakhouse and Yard House, Collier said.