Darden Restaurants Inc (DRI) stock analysis

P/E above its 5-year median

Darden Restaurants's P/E of 22.4 is above its own 5-year median of 20.2.

P/E below the industry

Darden Restaurants's P/E of 22.4 is below the Eating and Drinking Places median of 28.5.

EV/EBITDA above its 5-year median

Darden Restaurants's EV/EBITDA of 12.5 is above its 5-year median of 12.0.

P/B above the industry

Darden Restaurants's price-to-book of 12.52 is above the Eating and Drinking Places median of 3.13.

Trading above fair value

The share price of $228.94 is above our fair value estimate of $219.32.

Margin of safety under 20%

The price is 4.4% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 8.0% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 9.1% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 7.5% over the last twelve months, against a 5-year average of 13.9% a year.

Growing faster than the industry

Revenue grew 8.1% over the last twelve months; the Eating and Drinking Places median is 5.9%.

Guidance raised

Darden Restaurants raised its fiscal 2027 effective tax rate outlook on Jun 25, 2026.

Gross margin slipping

Gross margin was 20.3% over the last twelve months, against 20.4% a year earlier.

Return on equity over 15%

Return on equity was 55.1% over the last twelve months and averaged 45.7% over five years.

Return on capital over 10%

Return on invested capital was 54.7%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Darden Restaurants's return on equity of 55.1% is above the Eating and Drinking Places median of 7.9%.

Earnings grew over 5 years

Net income grew 13.9% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 8.8% over the last twelve months, against a 5-year average of 9.2%.

Net margin above the industry

Darden Restaurants's net margin of 8.8% is above the Eating and Drinking Places median of 1.9%.

High debt

Debt is 47.4% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 33.1% five years ago to 47.4%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 183% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets don't cover short-term debts

Current assets are 0.30 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.56; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Darden Restaurants paid dividends worth 2.7% of the share price over the last twelve months.

Yield below Treasuries

The 2.7% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Darden Restaurants yields 2.7%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 59.4% of net income.

Covered by free cash flow

Dividends take 66.6% of free cash flow.