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Investing.com - KeyBanc raised its price target on Darden Restaurants (NYSE:DRI) to $245 from $230 on Monday while maintaining an Overweight rating on the stock. The new target represents potential upside from the current price of $225.78, with the stock trading near its 52-week high of $228.27.
The price target increase follows Darden’s fourth-quarter fiscal 2025 results, which featured better-than-expected earnings per share and same-store sales trends. Both Olive Garden and LongHorn widened their same-store sales growth gap versus the casual dining industry compared to the previous quarter. The company’s strong performance is reflected in its impressive 52.35% return over the past year, according to InvestingPro data, which offers 12 additional key insights about DRI’s performance.
KeyBanc noted that Darden’s outperformance was helped by strong consumer response to marketing programs, including the Buy One, Take One offer at Olive Garden and a modest contribution from its Uber (NYSE:UBER) Direct partnership.
Darden also provided its initial fiscal year 2026 outlook, which KeyBanc views as conservative, and reiterated its long-term framework calling for 10-15% total shareholder return. The restaurant company’s strategy places heavier emphasis on revenue growth.
KeyBanc justified its higher valuation target, which equates to approximately 21 times its fiscal year 2027 earnings per share estimate, citing potential acceleration in unit growth and modestly higher expected same-store sales growth compared to Darden’s historical valuation range in the high teens.
In other recent news, Darden Restaurants Inc. reported impressive financial results for the fourth quarter of fiscal year 2025, exceeding analysts’ expectations. The company posted an earnings per share of $2.98, which surpassed the forecast of $2.94, and reported revenue of $3.3 billion, beating the anticipated $3.26 billion. This performance marks a 12.5% increase in earnings per share and a 10.6% rise in revenue compared to the previous year. Additionally, Darden returned $215 million to shareholders through dividends and share repurchases. The company also announced plans to open 60-65 new restaurants in fiscal 2026. Furthermore, Darden’s strategic initiatives, such as innovative product offerings and expansion efforts, have contributed to its robust performance, with same restaurant sales increasing by 4.6%. The company remains committed to sustainable growth, projecting total sales growth of 7-8% and same restaurant sales growth of 2-3.5% for fiscal 2026.
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