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    Can Darden Restaurants’ (DRI) Margin Outlook Withstand Rising Costs Despite Strong Sales and Dividends?

    Simply Wall St·09/21/2025 17:02:00
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    • Earlier this week, Darden Restaurants reported first-quarter earnings, highlighted by a 10.4% year-over-year increase in sales to US$3.04 billion and a quarterly dividend declaration of US$1.50 per share.
    • The company also faced a shareholder vote rejecting new greenhouse gas emissions targets, while analysts expressed concern over increased margin pressures from rising beef costs and seafood tariffs.
    • Given renewed analyst caution around profitability, we’ll examine how ongoing cost pressures could affect Darden’s forward-looking investment narrative.

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    Darden Restaurants Investment Narrative Recap

    To own Darden Restaurants stock, investors generally believe in the resilience of its brands and ongoing demand for full-service dining, even in a shifting consumer environment. Despite upbeat earnings and a solid quarterly dividend, recent cost headwinds, particularly from beef and seafood, remain the most important near-term risk, while successful same-restaurant sales growth continues to be the key catalyst. The shareholder vote on greenhouse gas targets did not appear to materially sway the critical drivers of short-term performance.

    The company's recent announcement of a US$1.50 per share dividend is especially relevant as it underscores Darden’s commitment to returning capital to shareholders, even amid input cost pressure. This steady payout could help shore up confidence around the investment case as the near-term focus sharpens on how margin pressures play out for the rest of the year.

    Yet, in contrast to growing sales and consistent dividends, investors should be aware that ongoing beef and seafood cost inflation could...

    Read the full narrative on Darden Restaurants (it's free!)

    Darden Restaurants' narrative projects $14.3 billion revenue and $1.4 billion earnings by 2028. This requires 5.7% yearly revenue growth and a $0.3 billion earnings increase from $1.1 billion today.

    Uncover how Darden Restaurants' forecasts yield a $224.86 fair value, a 22% upside to its current price.

    Exploring Other Perspectives

    DRI Community Fair Values as at Sep 2025
    DRI Community Fair Values as at Sep 2025

    Six members of the Simply Wall St Community estimated Darden's fair value between US$135 and US$224.86 per share. As you weigh these varied views, consider how rising input costs could affect the company’s earnings momentum, there is real value in comparing diverse opinions before deciding what comes next.

    Explore 6 other fair value estimates on Darden Restaurants - why the stock might be worth as much as 22% more than the current price!

    Build Your Own Darden Restaurants Narrative

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.