Shares of Darden (NYSE: DRI ) have been an excellent performer over the past year, rallying 30% into Thursday. However, with the stock at an elevated level, there is little room for error, and mixed quarterly earnings sent the stock down ~8% in early trading Thursday. I have been ratingOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or ...

Shares of Darden (NYSE: DRI ) have been an excellent performer over the past year, rallying 30% into Thursday. However, with the stock at an elevated level, there is little room for error, and mixed quarterly earnings sent the stock down ~8% in early trading Thursday. I have been ratingOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or ...

Core Viewpoint - Darden Restaurants, Inc. experienced a nearly 10% decline in share price following weaker-than-expected quarterly earnings and revenue, despite reporting double-digit sales growth driven by acquisitions and steady same-restaurant gains [1] Financial Performance - The company reported first-quarter adjusted earnings per share of $1.97, missing the analyst consensus estimate of $2.00 [1] - Quarterly sales totaled $3.004 billion, falling short of the expected $3.040 billion [1] - Total sales increased by 10.4%, supported by a same-restaurant sales increase of 4.7% and contributions from the acquisition of 103 Chuy's Tex Mex restaurants and 22 net new restaurants [2] Segment Performance - Olive Garden sales reached $1.301 billion, up from $1.209 billion a year ago, with segment profit rising to $267.6 million from $250.1 million [3] - Same-restaurant sales at Olive Garden increased by 5.9%, while LongHorn Steakhouse saw a 5.5% rise; Fine Dining same-restaurant sales decreased by 0.2%, and Other Business grew by 3.3% [2] Cash and Dividend - The company ended the quarter with cash and equivalents of $211 million and inventories valued at $309.6 million [4] - Darden declared a quarterly cash dividend of $1.50 per share, payable on November 3 [4] - During the quarter, approximately 0.9 million shares were repurchased for a total of $183 million, with $865 million remaining under the current $1 billion repurchase authorization [4] Outlook - Darden reaffirmed its fiscal 2026 adjusted EPS guidance at $10.50–$10.70, slightly above the consensus estimate of $10.68 [5] - The fiscal 2026 sales outlook was raised to $12.983 billion–$13.104 billion from a previous range of $12.922 billion–$13.043 billion, compared to the Street estimate of $13.078 billion [5]

Group 1: Market Overview - Pre-market futures are up following a 25 basis points interest rate cut by the Fed, with the Dow up +230 points, S&P 500 up +51, Nasdaq up +287, and Russell 2000 up +30 points [1] - Bond yields have slightly increased, with the 10-year yield at +4.08% and the 2-year yield at +3.55% [1] Group 2: Jobless Claims - Initial Jobless Claims spiked to +264K due to a reporting disruption in Texas, marking the highest week of new claims since October 2021, but fell back to +231K for the last week [2] - Continuing Claims have decreased to 1.920 million, the lowest since May, remaining below 1.94 million for two consecutive weeks [3] Group 3: Manufacturing Index - The Philly Fed Index reported its highest monthly tally since January at +23.2, indicating five up-months and four down-months in 2025, contrasting with the negative Empire State Index of -8.7 for the same month [5] Group 4: Earnings Reports - Darden Restaurants (DRI) reported fiscal Q1 earnings of $1.97 per share, missing estimates by 3 cents, but revenues of $3.04 billion exceeded expectations, up from $2.76 billion a year ago [6] - FedEx (FDX) is expected to report earnings growth of +1.4% with a revenue increase of +0.9%, while Lennar Homes (LEN) faces tough comparisons with expected earnings growth of -45% and revenue decline of -4% [7]

Group 1 - The core viewpoint of the article indicates that Darden Restaurants (DRI.US) experienced a significant stock decline of approximately 10.5%, reaching a new low of $186.9, marking the lowest point in over five months [1] - For the first quarter of fiscal year 2026, Darden reported a revenue increase of 10% year-over-year, totaling $3.04 billion, which met market expectations [1] - The net profit for the quarter was $258 million, with adjusted earnings per share of $1.97, slightly below the market expectation of $2.00 [1] Group 2 - Darden Restaurants has revised its revenue growth forecast for fiscal year 2026 to a range of 7.5% to 8.5%, an increase from the previous forecast of 7% to 8% [1] - The company reaffirmed its adjusted earnings per share forecast for the fiscal year, projecting it to be between $10.5 and $10.7 [1]

Core Insights - Darden Restaurants, Inc. reported first-quarter fiscal 2026 results with earnings missing estimates but revenues exceeding expectations, leading to an 8% decline in stock price during pre-market trading [1] Financial Performance - Adjusted earnings per share (EPS) for the fiscal first quarter were $1.97, below the Zacks Consensus Estimate of $2.00, compared to $1.75 in the prior-year quarter [2] - Total sales reached $3,044.7 million, surpassing the consensus mark of $3,040 million, reflecting a 10.4% increase from the previous year, supported by a 4.7% increase in same-restaurant sales [3] Segment Performance - Sales at Olive Garden increased 7.6% year over year to $1.3 billion, matching estimates, with same-restaurant sales up 5.9% [4] - LongHorn Steakhouse saw an 8.8% year-over-year sales increase to $776.4 million, though below the estimate of $811.5 million, with comps rising 5.5% [5] - Fine Dining segment sales rose 2.7% to $286.5 million, slightly above the estimate of $285 million, but comps fell 0.2% [5] - Other Business segment sales surged 22.5% year over year to $680.7 million, exceeding the estimate of $628.5 million, with comps up 3.3% [6] Operating Costs - Total operating costs and expenses increased 8.8% year over year to $2.7 billion, primarily due to higher food and beverage expenses, labor costs, and marketing expenses, missing the projection of $2.72 billion [7] Balance Sheet - As of August 24, 2025, cash and cash equivalents were $211 million, down from $240 million as of May 25, 2025, while inventories decreased slightly to $309.6 million [8] Future Outlook - For fiscal 2026, Darden raised its total sales growth outlook to 7.5% to 8.5%, including approximately 2% growth related to the 53rd week, with same-restaurant sales growth anticipated between 2.5% to 3.5% [11] - The company plans to open approximately 65 net new restaurants and allocate $700-$750 million for capital spending in fiscal 2026 [12]

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Core Insights - Darden Restaurants Inc reported earnings of $1.97 per share, missing expectations, while revenue of $3.04 billion met forecasts, leading to a 9.7% drop in shares to $188.61 [1] - The company experienced strong same-store sales growth across its portfolio but faced challenges in the fine dining segment due to rising costs [1] - Despite the current struggles, Darden raised its 2026 forecast, indicating confidence in a potential rebound [1] Stock Performance - If the current trend continues, the stock will log its fifth consecutive daily loss and the steepest post-earnings drop in at least nine quarters, reaching its lowest levels since April [2] - Year-to-date, the stock is up 1.3% and reached an all-time high in June, but is now relying on its 320-day moving average to prevent further losses [2] Analyst Sentiment - Analysts remain bullish, with 18 out of 29 brokerages maintaining a "buy" or better rating, while 11 have a "hold" rating [3] - Following the earnings report, there was a significant number of price-target adjustments, but the 12-month consensus price target stands at $232.94, indicating a substantial premium to current levels [3] Options Market Activity - In the options market, sentiment is leaning bearish, with 7,865 puts traded compared to 1,885 calls, and overall volume at 24 times the average intraday amount [4] - The most active contracts include the monthly September puts with strike prices of 200, 195, 190, and 185, with new positions being opened at the last [4]

Financial Performance - Darden Restaurants reported revenue of $3.04 billion for the quarter ended August 2025, reflecting a year-over-year increase of 10.4% [1] - Earnings per share (EPS) for the quarter was $1.97, up from $1.75 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate by 0.17%, while the EPS fell short of the consensus estimate of $2.00 by 1.5% [1] Key Metrics - Total company-owned restaurants stood at 2,165, slightly below the average estimate of 2,167 by nine analysts [4] - Same-restaurant sales for LongHorn Steakhouse increased by 5.5%, compared to the average estimate of 5.8% [4] - Same-restaurant sales for Olive Garden rose by 5.9%, slightly below the average estimate of 6.1% [4] - Consolidated same-restaurant sales increased by 4.7%, surpassing the average estimate of 4.4% [4] Sales Breakdown - Olive Garden generated sales of $1.3 billion, close to the average estimate of $1.31 billion, marking a year-over-year increase of 7.6% [4] - Other Business sales reached $680.7 million, exceeding the average estimate of $664.65 million, representing a year-over-year change of 22.5% [4] - Fine Dining sales were reported at $286.5 million, slightly below the average estimate of $289.03 million, with a year-over-year increase of 2.7% [4] - LongHorn Steakhouse sales amounted to $776.4 million, compared to the average estimate of $782.66 million, reflecting an 8.8% year-over-year increase [4] Stock Performance - Darden Restaurants' shares returned +0.6% over the past month, while the Zacks S&P 500 composite increased by +2.5% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - Darden Restaurants' stock price fell significantly by 8.1% following the release of mixed quarterly results, with performance from Olive Garden and LongHorn Steakhouse offsetting weakness in its fine dining segment [1] Company Performance - Darden Restaurants reported mixed quarterly earnings, indicating that while some segments performed well, others struggled [1] - The performance of Olive Garden and LongHorn Steakhouse was strong enough to counterbalance the underperformance in the high-end dining sector [1]