Financial Performance - Total sales increased by 7.3% to $3.10 billion for the second quarter of fiscal 2026, and by 8.9% to $6.15 billion for the first six months, compared to $2.89 billion and $5.65 billion for the same periods in fiscal 2025[106] - Net earnings from continuing operations were $237.4 million for the second quarter and $495.3 million for the first six months of fiscal 2026, up from $215.7 million and $423.3 million in the same periods of fiscal 2025[106] - Diluted net earnings per share from continuing operations were $2.03 for the second quarter and $4.23 for the first six months of fiscal 2026, compared to $1.82 and $3.57 for the same periods in fiscal 2025[106] Sales Growth Expectations - The company expects sales growth for fiscal 2026 to be between 8.5% and 9.3%, with same-restaurant sales growth projected between 3.5% and 4.3%[107] Restaurant Operations - The company-owned restaurant count increased to 2,182 as of November 23, 2025, from 2,159 at the end of fiscal 2025, reflecting the addition of 103 Chuy's locations[102] - Olive Garden's sales increased by 5.4% to $1.36 billion for the second quarter, driven by a 1.7% increase in same-restaurant guest counts and a 3.0% increase in average check[110] - LongHorn Steakhouse's sales rose by 9.3% to $775.9 million for the second quarter, supported by a 3.8% increase in same-restaurant guest counts[111] - Fine Dining segment sales increased by 3.3% to $316.2 million for the second quarter, primarily due to revenue from new restaurants[112] - Other Business segment sales grew by 11.3% to $647.3 million for the second quarter, largely driven by the addition of Chuy's[113] Capital Expenditures - Capital expenditures for new restaurant openings and technology initiatives are expected to be between $750 million and $775 million for fiscal 2026[107] - Capital expenditures increased to $375.0 million for the first six months of fiscal 2026, up from $314.5 million in the same period of fiscal 2025, reflecting increased spending on new restaurant construction and remodels[138] Cost Management - Food and beverage costs as a percentage of sales increased to 31.1% for the three months ended November 23, 2025, compared to 30.2% for the same period in 2024[117] - Restaurant labor costs as a percentage of sales rose to 32.2% for the three months ended November 23, 2025, from 32.1% in the prior year[117] - General and administrative expenses decreased to 3.8% of sales for the three months ended November 23, 2025, down from 5.0% in the same period of 2024[117] Tax and Discontinued Operations - The effective income tax rate for continuing operations increased to 12.8% for the three months ended November 23, 2025, compared to 12.3% for the same period in 2024[119] - The company reported losses from discontinued operations of $0.2 million for the second quarter of fiscal 2026, down from $0.6 million in the same quarter of fiscal 2025[121] Profit Margins - Olive Garden's segment profit margin increased to 21.8% for the three months ended November 23, 2025, compared to 21.5% in the prior year[124] Credit and Financing - The company entered into a $1.25 billion Revolving Credit Agreement on October 23, 2023, with no outstanding balances as of November 23, 2025[129] - As of November 23, 2025, the company had $812 million of credit available under the Revolving Credit Agreement after considering commercial paper and letters of credit[129] - The company targets an investment-grade bond rating, with current ratings of "Baa2" from Moody's and "BBB" from both Standard & Poor's and Fitch[128] Cash Flow - Net cash flows provided by operating activities from continuing operations increased to $663.2 million for the first six months of fiscal 2026, compared to $661.8 million for the same period in fiscal 2025[136] - Net cash flows used in investing activities from continuing operations were $363.9 million for the first six months of fiscal 2026, a significant decrease from $939.3 million in the first six months of fiscal 2025[138] - Net cash flows used in financing activities from continuing operations were $314.9 million for the first six months of fiscal 2026, compared to net cash provided by financing activities of $298.9 million for the same period in fiscal 2025[139] Share Repurchase - The company authorized a new share repurchase program allowing for the repurchase of up to $1 billion of outstanding common stock, with 2 million shares repurchased in the first six months of fiscal 2026[141] Current Assets and Liabilities - Current assets totaled $1.04 billion as of November 23, 2025, an increase from $937.7 million as of May 25, 2025, primarily due to higher prepaid income taxes and inventories[143] - Current liabilities increased to $2.65 billion as of November 23, 2025, from $2.25 billion as of May 25, 2025, driven by an increase in short-term debt[144] Future Earnings Risks - The potential losses in future net earnings from changes in equity forwards and commodity instruments were approximately $65.2 million over a one-year period as of November 23, 2025[150] - The fair value of long-term fixed-rate debt outstanding averaged $2.18 billion, with a high of $2.20 billion and a low of $2.14 billion during the six months of fiscal 2026[150]

Core Viewpoint - As interest rates decline heading into 2026, investors may shift their focus from fixed-income instruments to attractive dividend stocks, with analysts' stock selection aiding in making informed choices [1] Group 1: Chevron (CVX.US) - Chevron returned $6 billion to shareholders in Q3 through $3.4 billion in dividends and $2.6 billion in stock buybacks, offering a quarterly dividend of $1.71 per share, equating to an annualized dividend of $6.84 and a yield of approximately 4.5% [2] - Piper Sandler analyst Ryan Todd reaffirmed a "Buy" rating on Chevron with a target price of $178, noting the company's solid position despite unfavorable oil conditions and positive refining business performance [2] - Todd highlighted that Chevron's capital efficiency is underestimated, with upstream capital expenditures per barrel of oil equivalent (boe) being 29% lower than the industry average, and he expects a conservative annual free cash flow growth of 10% [2][3] Group 2: Darden Restaurants (DRI.US) - Darden Restaurants announced a quarterly dividend of $1.50 per share, payable on February 2, 2026, resulting in an annualized dividend of $6 per share and a yield of 3.2% [4] - BTIG analyst Peter Saleh maintained a "Buy" rating on Darden with a target price of $225, citing a mixed but mostly positive quarterly report driven by improved customer traffic in major brands and same-store sales exceeding expectations [4] - Saleh noted that high beef prices remain a challenge affecting restaurant profit margins and earnings per share (EPS), but he is optimistic about Darden meeting its performance guidance due to stabilizing beef costs and easing labor cost pressures [4][5] Group 3: Ares Capital (ARCC.US) - Ares Capital announced a dividend of $0.48 per share, to be paid on December 30, 2025, leading to an annualized dividend of $1.92 per share and a yield of 9.5% [6] - RBC Capital analyst Kenneth Lee identified Ares Capital as a favored BDC stock for 2026, reaffirming a "Buy" rating with a target price of $23, despite a less optimistic outlook for the BDC sector due to potential declines in net interest income (NII) and return on equity (ROE) [7] - Lee emphasized Ares Capital's leadership position in the BDC market, substantial scale, and strong asset issuance capabilities of its direct lending platform, supporting a positive view on the sustainability of its dividend [7]

Group 1: Chevron (CVX) - Chevron returned $6 billion to shareholders in Q3, comprising $3.4 billion in dividends and $2.6 billion in share repurchases, with a quarterly dividend of $1.71 per share, yielding approximately 4.5% [3] - Piper Sandler analyst Ryan Todd reiterated a buy rating on Chevron with a price target of $178, while TipRanks' AI Analyst has an "outperform" rating and a price target of $164, indicating confidence in the company's solid position despite challenges [4] - Todd highlighted Chevron's capital efficiency, noting its upstream capital expenditure per barrel of oil equivalent is 29% below the peer average, and projected a conservative annual growth outlook of 10% for free cash flow [5] Group 2: Darden Restaurants (DRI) - Darden announced a quarterly dividend of $1.50 per share, with an annualized dividend of $6 per share, yielding 3.2% [8] - BTIG analyst Peter Saleh maintained a buy rating on Darden with a price target of $225, while TipRanks' AI Analyst has a price target of $218, reflecting optimism despite mixed results in Q2 [9] - Saleh noted that Darden's strategy of under-pricing inflation and focusing on delivery has driven strong sales momentum, although high beef prices have impacted margins [11] Group 3: Ares Capital (ARCC) - Ares Capital announced a dividend of 48 cents per share, with an annualized dividend of $1.92, yielding 9.5% [14] - RBC Capital analyst Kenneth Lee reaffirmed a buy rating on Ares Capital with a price target of $23, while TipRanks' AI Analyst has an "outperform" rating with a price target of $24, indicating strong confidence in the company [15] - Lee emphasized Ares Capital's dominant market position and strong earnings support for dividends, despite a potential decline in net interest income and return on equity in the BDC space [17]

Core Insights - The article highlights the expertise of a seasoned equity analyst specializing in the U.S. restaurant industry, covering various segments from quick-service to fine dining [1] - The analyst employs advanced financial modeling and sector-specific KPIs to identify hidden value in public equities, particularly focusing on micro and small-cap companies often overlooked by mainstream analysts [1] Industry Focus - The research firm, Goulart's Restaurant Stocks, is dedicated to the U.S. restaurant sector, which includes quick-service, fast casual, fine dining, and niche concepts [1] - The analyst also covers related sectors such as consumer discretionary, food & beverage, and casinos & gaming, indicating a broad understanding of the consumer market [1] Research Methodology - The analyst utilizes advanced financial modeling and strategic insights to conduct thematic research and valuation efforts [1] - A focus on sector-specific KPIs allows for a more nuanced understanding of the restaurant industry's dynamics and potential investment opportunities [1] Background and Expertise - The analyst possesses a strong academic foundation with an MBA in Controllership and Accounting Forensics, along with a Bachelor's in Business Administration [1] - Specialized training in valuation, financial modeling, and restaurant operations enhances the analyst's ability to provide in-depth insights into the industry [1]

Core Thesis - Darden Restaurants (NYSE: DRI) stock shows potential for a trend-following entry after a significant pullback in 2025, with a credible path to market-beating returns in 2026 if resistance is cleared [1] Price Action and Trends - DRI stock has been in an uptrend since 2014, with the only significant disruption being the volatility caused by COVID-19 [2] - Recent activity indicates a strong uptrend in 2024, breaking out of an Ascending Triangle Pattern and reaching a new all-time high, driven by growth, margin strength, and capital returns [3] - The stock experienced a 25% decline from its peak to the November 2025 low, but the long-term uptrend remains intact [4] Technical Indicators - The recent pullback allowed momentum indicators like MACD and stochastic to reset, indicating potential for further upward movement [5] - The 150-week EMA, a critical long-term support indicator, is advancing and aligns with the DRI uptrend, setting the stage for a rebound [5] - Technical indicators suggest a trend-following entry, with bullish crossovers in stochastic and MACD indicating an uptrending market that could retest current highs in 2026 [7] Key Resistance Levels - The stock must reclaim the 150-day EMA to confirm accumulation, as many investors view this line as a proxy for intermediate-term accumulation [8] - A successful push above the 150-day EMA, followed by a retest, would provide confirmation for traders seeking more than an initial bounce [9] Earnings Performance - Darden's fiscal Q2 results showed over 7% year-over-year growth, substantial margins, and healthy cash flow, including a 3.1% yielding dividend and share buybacks [10] - The FQ2 release led to price target increases and upgrades, affirming a Moderate Buy rating with a 20% upside forecast, driven by aggressive institutional buying [11] - Institutions own over 90% of the stock, with a notable purchasing activity of $2 for every $1 sold in 2025, indicating limited downside and ample upside potential for DRI [12]

Summary of U.S. Consumer Strategy & Quantitative Research Webinar Industry Overview - The focus is on the U.S. Consumer sector, specifically Consumer Discretionary and Consumer Staples, which have underperformed the market by low double-digit percentages year-to-date in 2025 [3][18]. Core Insights and Arguments - **Market Performance**: 2025 has been challenging for the Consumer sector, with both Discretionary and Staples underperforming. Consumer Staples are now seen as attractive due to favorable price-to-forward earnings valuation multiples [3][31]. - **Sector Dynamics**: There is a contrasting performance between Consumer Staples and technology sectors, raising concerns about a potential tech bubble. Economic factors such as cutbacks in healthcare and SNAP benefits for low-income consumers, alongside inflation, could lead to an economic slowdown [4][19]. - **Investment Recommendations**: Focus on Consumer stocks that are: 1. More international 2. Exposed to higher-income consumers 3. Defensive in nature 4. Not facing idiosyncratic pressures that are not fully priced in [3][22]. - **Key Themes**: Tariff volatility, GLP-1 drug uptake, and consumer bifurcation are critical themes to monitor. Lower-income households are pressured by cutbacks, while higher-income households may benefit from upcoming tax breaks [5][20]. Subsector Recommendations - **Consumer Staples**: Emphasis on companies with international exposure in Soft Beverages and Household & Personal Care, as well as defensive Broadline Retailers. Caution is advised around companies negatively impacted by GLP-1 drug uptake [6][22]. - **Consumer Discretionary**: Focus on higher-quality names with reliable earnings performance. Caution is advised for those without a quality bias, although companies catering to higher-income consumers may benefit from tax breaks in 2026 [6][22]. Performance Metrics - **Consumer Discretionary**: - Best performers include Casinos (23.7%), Apparel Retail (22.7%), and Automotive Retail (19.1%). Weakest sectors include Textiles, Apparel, and Luxury Goods (2.1%) [27][28]. - **Consumer Staples**: - Dollar Stores (49.5%) and Tobacco (29.8%) are leading, while Food Producers (-7.3%) and Alcoholic Beverages (-28.6%) are lagging [29][30]. Valuation Insights - **Valuation Multiples**: Discretionary multiples are about 10% cheaper than historical averages, while Staples are in line with historical averages despite underperformance [31][32]. - **Stock Performance Drivers**: In 2025, multiple expansion has driven stock performance more than earnings growth in both sectors [44]. Earnings Revisions - **Sales Expectations**: Remained stable across consumer discretionary sectors, while earnings per share revisions have shown significant dispersion, particularly declining in textiles and luxury goods due to tariff impacts [51][52]. Conclusion - The current environment is characterized by significant sector rotation and stock-picking opportunities. Analysts recommend focusing on high-quality, defensive stocks with international exposure as the market navigates through economic uncertainties and potential sector shifts [21][22].

Company Overview - Darden Restaurants, Inc. (NYSE:DRI) is an American full-service restaurant company operating brands such as Olive Garden [2]. Financial Performance - For the second fiscal quarter, Darden reported revenue of $3.1 billion, exceeding analyst estimates of $3.07 billion [2]. - Adjusted earnings per share were $2.08, which fell short of the expected $2.10 [2]. Analyst Ratings - BTIG reiterated a Buy rating with a price target of $225 on December 19 [2]. - Stephens maintained an Equal Weight rating but reduced the price target from $215 to $205 on December 11, citing weaker trends at Olive Garden [2]. Market Trends - The CFO noted that high beef prices are impacting margins, although comparable sales at LongHorn Steakhouse remain stable despite this volatility [2]. - Jim Cramer highlighted the influence of chicken prices on Darden's performance, particularly in relation to Olive Garden [3].

Group 1 - Darden Restaurants, Inc. is recognized as a leading operator in the full-service dining industry, managing well-known brands such as Olive Garden, Ruth's Chris Steak House, and others [2] - The company has established a competitive advantage through operational excellence, scale, and prudent capital allocation, positioning itself as a category-defining enterprise in the restaurant sector [2] - Olive Garden's performance has been highlighted positively, contributing to Darden's status as a "retail winner" in the current economic landscape [1] Group 2 - Darden's portfolio includes a diverse range of restaurant concepts, which enhances its market presence and appeal to various consumer segments [2] - The company is noted for its ability to compound shareholder value, indicating a strong focus on long-term growth and profitability [2]

Market Overview - U.S. stock markets opened higher on December 19, 2025, following a volatile week, with major indexes buoyed by cooler-than-expected inflation data for November, raising hopes for potential Federal Reserve rate cuts in the new year [1][2] - The S&P 500 Index opened at 6,792.62 points, up 17.86 points or 0.26 percent, while the Nasdaq Composite Index opened at 23,121.90 points, up 115.54 points or 0.50 percent, and the Dow Jones Industrial Average opened at 47,974.82 points, up 22.97 points or 0.05 percent [2] Economic Outlook - The Federal Reserve cut interest rates by a quarter-point to a range of 3.50%-3.75% during its final meeting of 2025, but further cuts are not guaranteed without significant weakening in the job market [3] - Economic reports are expected to be viewed with skepticism due to distortions caused by a recent government shutdown [3][4] Upcoming Economic Data - Key economic data releases include Final GDP q/q, Core PCE Price Index, Existing Home Sales, and Revised UoM Consumer Sentiment, which are critical for assessing inflation and consumer behavior [4] Quadruple Witching Impact - "Quadruple witching" is occurring today, with a record $7.1 trillion in options expiring, which could lead to increased market volatility [5] Corporate Developments - Oracle (ORCL) shares rose 5.5% on news of a potential joint venture with ByteDance for TikTok's U.S. operations, granting American investors a controlling stake [6] - Micron Technology (MU) shares jumped nearly 5% after a strong earnings report, with a 10% surge the previous day, driven by demand for AI memory solutions [7] - Nike (NKE) shares fell over 10% due to weaker-than-expected revenue from China and higher tariffs impacting gross margins [8] - FedEx (FDX) reported revenue of $23.47 billion and adjusted earnings per share of $4.82, but shares remained flat [9] - Winnebago (WGO) shares soared 12% after strong fiscal first-quarter results and an increased full-year outlook [9] - Darden Restaurants (DRI) reported second-quarter revenue of $3,102.1 million, exceeding estimates, leading to a 1.8% rise in shares [10] - Cintas Corporation (CTAS) shares gained 1.3% after reporting earnings of $1.21 per share, beating expectations [10] - Enerpac Tool Group Corp. (EPAC) shares declined 8.8% after missing earnings estimates [10] Global Economic Developments - The Bank of Japan raised its key policy rate to 0.75%, the highest since 1995, contributing to a rise in global shares [11]

Sales Performance - Darden Restaurants reported sales of $3.1 billion for Q2 FY2026, marking a 7.3% increase from the previous year [1] - Same-store sales grew by 4.3%, driven by strong performance across major brands, with Olive Garden and LongHorn Steakhouse reporting increases of 4.7% and 5.9% respectively [1] Financial Results - The company achieved a net income of $237.2 million in Q2 FY2026, or $2.03 per share, compared to $215.7 million or $1.82 per share in the same quarter last year [2] - On an adjusted basis, diluted earnings from continuing operations were $2.08 per share, excluding costs related to restaurant closures and the acquisition of Chuy's [2] Future Outlook - Darden raised its full-year same-restaurant sales growth forecast to a range of 3.5% to 4.3%, up from a previous estimate of 2.5% to 3.5% [3] - The guidance for adjusted diluted earnings per share for FY2026 remains unchanged at $10.50 to $10.70 [3] Operational Insights - Darden's president and CEO noted that all segments delivered positive same-restaurant sales, exceeding top-line expectations [4] - The company has been enhancing delivery options through a partnership with Uber, utilizing Uber Direct's network for nationwide on-demand delivery for Olive Garden [5] - An on-demand delivery trial with Uber Technologies was initiated at Cheddar's Scratch Kitchen in March [6]