Darden Q2 Earnings Lag Estimates, Revenues Surpass, Stock Up

Darden Restaurants, Inc. DRI reported second-quarter fiscal 2026 results, with earnings missing the Zacks Consensus Estimate, but revenues beat the same. Following the results, the stock rose 5% in today’s pre-market trading session.

DRI’s Fiscal Q2 Earnings & Revenues

During the fiscal second quarter, Darden reported adjusted earnings per share (EPS) of $2.08, missing the Zacks Consensus Estimate of $2.09. In the prior-year quarter, DRI reported an adjusted EPS of $2.03.

Total sales during the quarter were $3,102.1 million, surpassing the consensus mark of $3,084 million. Sales increased 7.3% from the prior-year quarter’s level. This upside was backed by a blended same-restaurant sales increase of 4.3%. Also, contributions from 30 net new restaurants added to the positives.

DRI’s Sales by Segments

Darden reports business under four segments — Olive Garden, LongHorn Steakhouse, Fine Dining, including The Capital Grille and Eddie V's, and Other Business.

During the fiscal second quarter, sales at Olive Garden increased 5.4% year over year to $1.36 billion. Our estimate for the metric was $1.33 billion. Comps in the segment increased 4.7% year over year compared with a 5.9% rise reported in the previous quarter.

At LongHorn Steakhouse, sales were up 9.3% year over year to $775.9 million. Our estimate for the metric was $750.7 million. Comps in the segment rose 5.9% year over year compared with 5.5% growth reported in the previous quarter.

Sales in Fine Dining increased 3.3% year over year to $316.4 million. Our estimate for the metric was $302 million. Comps in the segment rose 0.8% year over year against a 0.2% drop reported in the previous quarter.

Sales in Other Business increased 11.3% year over year to $647.3 million. Our estimate for the metric was $686.8 million. Comps in the Other Business rose 3.1% year over year compared with a 3.3% rise reported in the previous quarter.

DRI’s Q2 Operating Highlights

In the fiscal second quarter, total operating costs and expenses inched up 7.1% year over year to $2.78 billion. The upside was primarily due to increased food and beverage expenses, restaurant expenses, labor costs and marketing expenses. The figure missed our projection of $2.75 billion.

DRI’s Balance Sheet

As of Nov. 23, 2025, cash and cash equivalents were $224.1 million compared with $240 million as of May 25, 2025.

During the fiscal second quarter, inventories were $354.5 million compared with $311.6 million reported in the previous quarter. As of Nov. 23, 2025, long-term debt was $2.14 billion compared with $2.13 billion as of May 25, 2025.

Darden’s Fiscal 2026 Outlook

For fiscal 2026, the company expects total sales growth of 8.5% to 9.3% (compared with the prior estimate of 7.5% to 8.5%), including approximately 2% growth related to the 53rd week. Same-restaurant sales growth in fiscal 2026 is anticipated to be between 3.5% and 4.3% year over year compared with the earlier estimate of 2.5% to 3.5%. Adjusted diluted EPS from continuing operations continues to be anticipated in the band of $10.50-$10.70.

The company expects to open approximately 65 to 70 net new restaurants and a total capital spending of $750-$775 million in fiscal 2026.

DRI’s Zacks Rank

Darden currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the Zacks Retail-Wholesale sector are:

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The company delivered a trailing four-quarter earnings surprise of 19.6%, on average. LOCO stock has fallen 3.2% year to date. The Zacks Consensus Estimate for LOCO’s 2026 sales and EPS indicates growth of 1.3% and 4.2%, respectively, year over year.

Dillard's, Inc. DDS sports a Zacks Rank #1 at present. The company delivered a trailing four-quarter earnings surprise of 26.5%, on average. DDS stock has rallied 50.1% year to date.

The Zacks Consensus Estimate for Dillard’s 2026 sales implies growth of 0.7%, while that for EPS implies a decline of 8.2% year over year.

Expedia Group, Inc. EXPE sports a Zacks Rank #1 at present. The company delivered a trailing four-quarter earnings surprise of 4.5%, on average. EXPE stock has gained 51.8% year to date.

The Zacks Consensus Estimate for EXPE’s 2026 sales and EPS indicates growth of 6.3% and 20.8%, respectively, year over year.

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This article originally published on Zacks Investment Research (zacks.com).

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