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    How Investors May Respond To Darden Restaurants (DRI) Strong Sales Growth But Earnings Miss And Higher Costs

    Simply Wall St·12/14/2025 06:21:52
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    • Earlier this year, Darden Restaurants reported its fiscal 2026 first-quarter results, with sales rising 10.4% year over year helped by same-restaurant growth and acquisitions, but earnings per share came in below analysts’ expectations.
    • The company’s updated adjusted EPS guidance for fiscal 2026 and analysts’ moderately optimistic stance are now shaping how investors assess its ability to balance cost pressures, particularly higher beef costs, with growth initiatives.
    • We’ll now examine how Darden’s combination of double-digit sales growth and an earnings miss may influence its investment narrative and outlook.

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    Darden Restaurants Investment Narrative Recap

    To own Darden, you need to believe its portfolio of casual dining brands can keep growing sales while protecting margins in a cost sensitive environment. The latest quarter’s double digit revenue growth, tempered by an earnings miss tied in part to higher beef costs, puts near term margin resilience in focus, while the key risk remains whether guest traffic and spending can hold up if consumer budgets tighten.

    The reaffirmed fiscal 2026 adjusted EPS outlook of US$10.50 to US$10.70, despite missing quarterly earnings expectations, is the announcement that most directly ties into this debate, because it frames how effectively Darden expects to offset commodity inflation and integration costs with price, promotions and unit growth. It also gives investors a reference point as they weigh current cost pressures against longer term benefits from new restaurant openings and acquisitions.

    Yet even with resilient sales, higher beef costs and softer guest counts could weigh on margins in ways investors should be aware of...

    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 an earnings increase of about $0.3 billion from $1.1 billion today.

    Uncover how Darden Restaurants' forecasts yield a $220.67 fair value, a 21% upside to its current price.

    Exploring Other Perspectives

    DRI 1-Year Stock Price Chart
    DRI 1-Year Stock Price Chart

    Five members of the Simply Wall St Community value Darden between US$135.95 and US$249.58, illustrating how far apart individual views can be. You may want to compare those expectations with the recent earnings miss and beef cost pressures that are now central to the company’s near term performance story.

    Explore 5 other fair value estimates on Darden Restaurants - why the stock might be worth 25% less than the current price!

    Build Your Own Darden Restaurants Narrative

    Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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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.