Darden Stumbles on Sales, But Analysts Stay Optimistic On Operational Execution: Here's Why

Several analysts reiterated their ratings and price targets on Darden Restaurants, Inc. DRI following today’s release of its fourth quarter FY24 earnings.

The company reported sales growth of 6.8% Y/Y to $2.957 billion, missing the analyst consensus estimate of $2.975 billion and adjusted EPS of $2.65 topping the consensus of $2.62.

Darden expects FY25 EPS from continuing operations of $9.40-$9.60 (estimate $9.56) and sales of $11.8 billion-$11.9 billion vs. street view of $11.948 billion. 

Stephens & Co. analyst Jim Salera stated that results showcased the company’s strong operational execution, which sets a positive tone for the upcoming conference call. The analyst says they are focused on the trajectory of comparable sales heading into FY25.

Salera writes that they anticipate potential pressure on the rest of the casual dining and fine dining segments this morning, following the softer results observed in Darden’s Olive Garden and Fine Dining segments.

Initial FY25 guidance indicates a modestly softer top-line than expected, likely due to challenging macroeconomic conditions, yet better-than-expected profitability with adjusted EPS guidance midpoint above current consensus, driven by enhanced restaurant-level operations, says the analyst.

The analyst reiterated the Equal-Weight rating and a price target of $165.

Meanwhile, TD Cowen analyst Andrew M. Charles kept the Buy rating and a price target of $170.

The analyst says they are encouraged as 2025 is anticipated to align with their expectations for a 10%+ total shareholder return (TSR), supported by a higher EPS guidance range that aligns closely with pre-release consensus.

Also, Wedbush analyst Nick Setyan maintained the Outperform rating with a price target of $170.

Investors can gain exposure to the stock via AdvisorShares Restaurant ETF EATZ and First Trust Dorsey Wright Momentum & Dividend ETF DDIV.

Price Action: DRI shares are up 1.16% at $155.72 at the last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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