Darden Stock Up on Q4 Earnings Surpass Estimates, Sales Rise Y/Y

Darden Restaurants, Inc. DRI reported fourth-quarter fiscal 2025 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis. Following the results, the stock inched up 4.1% in today’s pre-market trading session.

DRI’s Fiscal Q4 Earnings & Revenues

During the fiscal fourth quarter, Darden reported adjusted earnings per share (EPS) of $2.98, beating the Zacks Consensus Estimate of $2.96. In the prior-year quarter, DRI reported an adjusted EPS of $2.65. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Darden Restaurants, Inc. Price, Consensus and EPS Surprise

Darden Restaurants, Inc. price-consensus-eps-surprise-chart | Darden Restaurants, Inc. Quote

Total sales during the quarter were $3,271.7 million, surpassing the consensus mark of $3,266 million. Sales inched up 10.6% from the prior-year quarter’s level. This upside was backed by a blended same-restaurant sales increase of 4.6%. Also, contributions from 103 Chuy's restaurants and 25 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 fourth quarter, sales at Olive Garden increased 8.1% year over year to $1.38 billion. Our estimate for the metric was $1.36 billion. Comps in the segment increased 6.9% year over year compared with a 0.6% rise reported in the previous quarter.

At LongHorn Steakhouse, sales were up 9.3% year over year to $833.8 million. Our estimate for the metric was $837.9 million. Comps in the segment rose 6.7% year over year compared with 2.6% growth reported in the previous quarter.

Sales in Fine Dining increased 2.3% year over year to $334.6 million. Our estimate for the metric was $380 million. Comps in the segment fell 3.3% year over year compared with a 0.8% drop reported in the previous quarter.

Sales in Other Business increased 22.4% year over year to $722.3 million. Our estimate for the metric was $673.9 million. Comps in the Other Business rose 1.2% year over year compared with a 0.4% rise reported in the previous quarter.

DRI’s Q4 Operating Highlights

In the fiscal fourth quarter, total operating costs and expenses inched up 12.8% year over year to $2.89 billion. The upside was primarily due to increased food and beverage expenses, restaurant expenses, labor costs and marketing expenses. The figure surpassed our projection of $2.82 billion.

DRI’s Balance Sheet

As of May 25, 2025, cash and cash equivalents were $240 million compared with $194.8 million as of May 26, 2024.

During the fiscal fourth quarter, inventories were $311.6 million compared with $324.6 million reported in the previous quarter. As of May 25, 2025, long-term debt was $2.13 billion compared with $1.37 billion as of May 26, 2024.

During the fiscal fourth quarter, Darden’s board of directors repurchased approximately 0.2 million shares of its common stock, worth approximately $51 million. On June 18, 2025, Darden's board of directors authorized a new share repurchase program, allowing it to buy back up to $1 billion of outstanding common stock. This program has no expiration date and replaces the previous share repurchase authorization.

Fiscal 2025 Highlights

Total revenues in fiscal 2025 amounted to nearly $12.08 billion compared with $11.39 billion in fiscal 2024.

Operating income in fiscal 2025 totaled $1.36 billion compared with $1.31 billion reported in fiscal 2024.

In fiscal 2025, adjusted EPS was $9.55 compared with $8.88 reported in the previous year.

Darden’s Fiscal 2026 Outlook

For fiscal 2026, the company expects total sales growth of 7% to 8%, including approximately 2% growth related to the 53rd week. Same-restaurant sales growth in fiscal 2026 is anticipated to be between 2% to 3.5% year over year. Adjusted diluted EPS from continuing operations is anticipated in the band of $10.50-$10.70.

The company expects to open 60-65 net new restaurants and projects a total capital spending of $700-$750 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 Sprouts Farmers Market, Inc. SFM, Shake Shack Inc. SHAK and Wingstop Inc. WING.

Sprouts Farmers currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

The company delivered a trailing four-quarter earnings surprise of 16.5%, on average. Sprouts Farmers stock has gained 28.8% in the year-to-date period. The Zacks Consensus Estimate for Sprouts Farmers’ 2025 sales and EPS indicates growth of 13.7% and 35.5%, respectively, from the year-ago period’s levels.

Shake Shack presently carries a Zacks Rank #1. The stock has inched up 1.1% in the year-to-date period. Shake Shack delivered a trailing four-quarter earnings surprise of 4.1%, on average.

The Zacks Consensus Estimate for Shake Shack’s 2025 sales and EPS implies growth of 15.5% and 45.7%, respectively, from the year-ago levels.

Wingstop presently holds a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 6.1%, on average. The stock has gained 22.3% in the year-to-date period.
 
The Zacks Consensus Estimate for Wingstop’s 2025 sales and EPS indicates an increase of 16.8% and 6.6%, respectively, from the year-ago levels.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research