There are several reasons Darden Restaurants’ (NYSE: DRI) stock price can trend higher this year, including, but not limited to, top- and bottom-line outperformance, guidance, growth, acceleration, the dividend, and share buybacks. The net result is a strong tailwind for the price action, which is gaining momentum.
The technical outlook alone suggests that this stock could rise by another $80 relative to its mid-June highs, and there is a high probability that this is a low target.
The combined impact of growth, balance sheet health, cash flow, and capital returns has lifted stocks like Cintas (NASDAQ: CTAS), Casey’s General Stores (NASDAQ: CASY), and AutoZone (NYSE: AZO) higher for decades, providing a high double-digit CAGR throughout.
Darden Restaurants Outperforms in Q4 2025: Guides Strongly for 2026
Darden Restaurants had a solid quarter, including the impacts of acquisitions, comparable store growth, and 25 net new organic locations. The $3.3 billion in revenue is up 10.6% compared to the prior year and outpaced MarketBeat’s reported consensus by 120 basis points. The strength was driven by the acquisition of Chuy’s Tex Mex and the 4.6% comp store gain. Comparable store sales strength was observed across all primary categories, with the core Olive Garden segment increasing by 6.9%, LongHorn Steakhouse by 6.7%, and Other by 1.2%. Fine Dining is the only area of weakness, contracting by 3.3%
The margin news is another area of strength for this restaurant stock. The company experienced margin pressures but was able to offset them. The overall result is slightly slower earnings growth, but still enough to maintain the health of the balance sheet, growth prospects, and capital return plans. The capital return is a significant factor, including dividends and aggressive repurchases, which reduced the count by an average of 1.8% in Q1. The aggressive pace is expected to continue, as the board has authorized another $1 billion in buybacks, equivalent to nearly 4% of the pre-release market capitalization.
The guidance is also strong. The company’s full-year outlook is slightly below the consensus estimate, but bullish for the stock price, as it forecasts high single-digit growth and substantial margins, and the revision trend was leading to a low-end range. Regardless, the $10.60 in expected adjusted EPS is more than sufficient to cover the $6 per share in dividend payments and the buyback plans.
The balance sheet shows no red flags. The company reported increased cash, current, and total assets sufficient to offset the increases in liabilities and debt in FY2025. The net result is a 3% increase in shareholder equity, accompanied by low leverage, with long-term debt of less than 1x equity.
Analysts' Trends Support the Uptrend in Darden Restaurants' Stock Price
Analysts' trends were bullish for Darden stock ahead of the release and will likely continue afterward. They include increasing coverage, firming sentiment, a Moderate Buy rating, and rising consensus price target. The consensus assumed the stock was at fair value before the release, but the revision trend was leading to the high-end range, where the stock price is heading afterward.
Darden’s price action surged more than 3% in the wake of the release, moving up to set a new high. The move appears strong and is likely to lead to another sustained updraft, but there is a risk. If the market is unable to hold its gains after the open, there is a risk that it will become range-bound and consolidate at the current highs. In this scenario, DRI stock could trend sideways until later in the year, when the guidance is either affirmed or refuted by subsequent quarterly reports.
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