Darden Restaurants-Darden to Post Q3 Earnings: What's in Store for the Stock?

Core Viewpoint - Darden Restaurants, Inc. is set to report its third-quarter fiscal 2025 results on March 20, with expectations of improved earnings and revenue compared to the previous year [1][3]. Earnings Estimates - The Zacks Consensus Estimate for fiscal third-quarter earnings per share (EPS) is $2.81, reflecting a 7.3% increase from$ 2.62 in the same quarter last year [3]. - Revenue expectations are pegged at $3.21 billion, indicating a 7.9% rise from the prior year's figure [3]. Factors Influencing Performance - Darden's quarterly results are anticipated to benefit from strong same-restaurant sales growth, strategic pricing, and operational efficiencies [4]. - Menu innovation and value offerings are expected to drive customer traffic, alongside enhancements in digital ordering and loyalty programs [4]. Revenue Contributions - Core casual dining brands, particularly Olive Garden and LongHorn Steakhouse, are projected to contribute significantly to revenue, with expected increases of 3.4% to$ 1.4 billion and 7% to $0.8 billion, respectively [5]. - Fine dining revenue is expected to rise by 5.7% year over year to$ 0.4 billion [5]. Operational Enhancements - Improvements in supply chain optimization and technology-driven efficiencies are likely to enhance cost controls, contributing to margin expansion [6]. - Initiatives aimed at reducing food waste and optimizing kitchen operations are expected to support bottom-line growth, with adjusted EBITDA projected at $0.55 billion [6]. Cost Challenges - Darden faces macroeconomic challenges, including inflationary pressures and fluctuations in consumer discretionary spending [7]. - Food and beverage costs are predicted to rise by 8.2% to$ 1 billion, while labor costs are expected to increase by 6.1% to $1 billion [7]. Earnings Prediction Model - The current model does not predict an earnings beat for Darden, as the company has an Earnings ESP of -1.24% and a Zacks Rank of 3 [8].