Darden Restaurants Q4 Review: Strong Performance Despite Lower Same-Store Sales - Analyst's Perspective

Stephens analyst Joshua Long reiterated an Overweight rating on the shares of Darden Restaurants Inc DRI with a price target of $170.

Total Q4 revenue of $2.7 billion was in-line with Street estimates of $2.7 billion and EPS of $2.58 topped the consensus estimate of $2.54.

Darden guided to FY24 same-store sales of +2.5%-+3.5% growth.

The analyst said given that Olive Garden, Fine Dining, and other segment comparable sales came in below expectations, the focus should be on the trajectory of comparable sales into fiscal 1Q24.

Darden's value steakhouse category continues to perform, which the analyst views as a favorable reach through for Equal Weight-rated Texas Roadhouse Inc TXRH.

Though additional details on trends at Olive Graden are needed, the analyst expects the rest of the casual segment could be under pressure this morning given the brand's same-store sales miss.

TD Cowen analyst Andrew M. Charles reiterated an Outperform rating on the shares with a price target of $160.

The 4Q EPS beat was a function of Olive Garden & LongHorn Steakhouse same-store-sales overshadowing misses in the Other Business & Fine Dining segments, as well as a lower tax rate, said the analyst.

While SSS & tax were guided favorably, the analyst noted a higher anticipated share count, modestly lower openings & perhaps implied G&A weigh on the outlook.

Price Action: DRI shares are trading lower by 1.95% at $163.11 on the last check Thursday.