Darden Restaurants stock rises following earnings report

Investing.com -- Shares of Darden Restaurants Inc (NYSE:DRI) climbed 7.5% as the company reported its third-quarter fiscal 2025 earnings. Despite a slight miss on both earnings per share (EPS) and revenue expectations, the stock surged in Thursday’s trading. Darden posted an EPS of $2.80, just shy of the forecasted $2.81, and revenue of $3.2 billion, marginally below the anticipated $3.22 billion. Notably, this EPS represents a 6.9% increase compared to the same quarter last year.

Investor confidence seemed undeterred by the minor shortfalls, instead focusing on the company’s strategic direction and growth prospects. The positive stock movement also reflects the company’s robust performance in key segments, with Olive Garden and LongHorn Steakhouse reporting sales growth of 1.5% and 5.1% respectively. The acquisition of Chuy’s also significantly boosted the "Other Business" segment, contributing to a 20.2% rise in sales.

The market’s reaction brought Darden’s stock price up to $202.18, approaching its 52-week high of $203.12. This suggests that the market has strong confidence in the company’s future.

Looking forward, Darden has provided guidance for the fourth quarter of fiscal 2025, projecting total sales between $3.23 billion and $3.26 billion, beating analyst expectations of $3.22 billion, with same-restaurant sales growth expected to exceed 3%. Adjusted diluted EPS is forecasted to range from $2.88 to $2.95, slightly above analyst expectations of $2.91 at the midpoint.

For fiscal 2026, Darden plans to open 60-65 new restaurants and has allocated significant capital expenditures for new establishments, maintenance, and technology.

CEO Rick Cardenas commented on the company’s resilience, noting the strength of their business model in a challenging environment and the lack of significant impact from changes in consumer sentiment on spending.

Truist Securities analyst Jake Bartlett expressed a positive outlook, reiterating a Buy stock rating with a price target of $212.00. Bartlett stated, "We view DRI’s F3Q25 results as a net positive for the stock. F3Q25 SSS missed, but guidance implies a sharp acceleration in F4Q25, which we believe is supported by the national delivery launch (2/24) and upcoming (3/24) ’Buy One, Take One’ promo."

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