Darden Restaurants (DRI) Valuation Check After Beating Expectations and Sustaining Same-Store Sales Growth

Darden Restaurants (DRI) is back on investors radar after topping expectations again, with steady same store sales growth above 3% and double digit earnings gains supporting a calm and upbeat tone ahead of its next report.

See our latest analysis for Darden Restaurants.

The stock has quietly regained some momentum, with a 1 month share price return of 7.25% after a tougher 3 month patch, while a 1 year total shareholder return of 14.63% shows longer term holders still comfortably ahead.

If Darden’s steady execution has you thinking about what else might be compounding in the background, now is a good time to explore fast growing stocks with high insider ownership.

With double digit earnings growth, resilient same store sales and analysts still seeing mid teens upside to fair value, the key question now is simple: is Darden still undervalued or already priced for its next leg of growth?

Most Popular Narrative Narrative: 16% Undervalued

With the narrative fair value sitting meaningfully above Darden Restaurants last close of $186.43, the story leans toward continued upside if assumptions hold.

The analysts are assuming Darden Restaurants's revenue will grow by 5.7% annually over the next 3 years. Analysts assume that profit margins will increase from 8.7% today to 10.0% in 3 years time.

Read the complete narrative.

Curious how steady mid single digit sales growth can still power a higher earnings base and valuation multiple for a mature restaurant group? The full narrative unpacks the precise mix of margin lift, buybacks and future earnings power that must line up perfectly to support that richer price tag.

Result: Fair Value of $220.67 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shrinking guest counts and rising beef costs could pressure margins and comparable sales. This may force investors to reassess how much growth Darden can realistically deliver.

Find out about the key risks to this Darden Restaurants narrative.

Build Your Own Darden Restaurants Narrative

If you are not fully aligned with this view or simply want to dig into the numbers yourself, you can build a custom narrative in minutes: Do it your way.

A great starting point for your Darden Restaurants research is our analysis highlighting 5 key rewards and 3 important warning signs that could impact your investment decision.

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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.

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