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Darden Restaurants Inc DRI

Morningstar Rating
$168.47 +2.03 (1.22%)
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Company Report

Darden's Cautious Pricing Strategy Looks Prudent as Restaurant Traffic Remains Muted

Darden Restaurants' playbook strives to leverage its competitive advantages, with the restaurant operator leaning into its scale-driven cost edge, embracing datacentric decision-making, trying to attract and retain employees with compelling benefits and culture, and providing a differentiated dining experience, consistent with management's back-to-basics strategy. While we view this approach as strategically sound, we expect any success at Darden to come in spite of, rather than propelled by, aggregate industry results, with the full-service industry posting anemic average annual sales growth of just 1%-2% over the past decade, well behind limited-service peers' 3%-4% clip.

Price vs Fair Value

DRI is trading within a range we consider fairly valued.
Price
$168.47
Fair Value
$125.00
Uncertainty
Medium
1-Star Price
$696.10
5-Star Price
$879.40
Economic Moat
Vlzrzz
Capital Allocation
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Bulls Say, Bears Say

Bulls

Darden's strong restaurant margin recovery should defend its 2%-3% annual unit growth targets even as pressure builds elsewhere in the full-service restaurant industry.

Bears

Slower full-service industry growth could result in aggressive discounting and challenges generating positive traffic in the intermediate term.

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News

Trading Information

Previous Close Price
$166.44
Day Range
$166.98168.91
52-Week Range
$133.36173.06
Bid/Ask
$145.00 / $175.35
Market Cap
$20.12 Bil
Volume/Avg
1.3 Mil / 1.0 Mil

Key Statistics

Price/Earnings (Normalized)
19.26
Price/Sales
1.78
Dividend Yield (Trailing)
3.05%
Dividend Yield (Forward)
3.05%
Total Yield
5.21%

Company Profile

Darden Restaurants is the largest restaurant operator in the U.S. full-service space, with consolidated revenue of $10.5 billion in fiscal 2023 resulting in 3%-4% full-service market share (per NRA data and our calculations). The company maintains a portfolio of 10 restaurant brands: Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Ruth's Chris, Yard House, The Capital Grille, Seasons 52, Eddie V’s, Bahama Breeze, and The Capital Burger. Darden generates revenue almost exclusively from company-owned restaurants, though a small network of franchised restaurants and consumer-packaged goods sales through the traditional grocery channel contribute modestly. As of the end of its fiscal 2023, the company operated 1,914 restaurants in the U.S.
Sector
Consumer Cyclical
Industry
Restaurants
Stock Style Box
Mid Core
Total Number of Employees
187,384

Competitors

Valuation

Metric
DRI
CMG
MCD
Price/Earnings (Normalized)
19.2658.3924.89
Price/Book Value
9.4423.47
Price/Sales
1.787.358.28
Price/Cash Flow
13.2943.0121.71
Price/Earnings
DRI
CMG
MCD

Financial Strength

Metric
DRI
CMG
MCD
Quick Ratio
0.121.421.03
Current Ratio
0.361.571.16
Interest Coverage
11.578.60
Quick Ratio
DRI
CMG
MCD

Profitability

Metric
DRI
CMG
MCD
Return on Assets (Normalized)
10.35%16.58%16.74%
Return on Equity (Normalized)
52.39%45.82%
Return on Invested Capital (Normalized)
16.76%18.10%21.67%
Return on Assets
DRI
CMG
MCD
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