Darden Restaurants exceeds expectations with strong Q4 earnings

In the United States, Darden Restaurants Inc. had a successful fourth-quarter performance reported on Friday, exceeding analysts' expectations. The company achieved an adjusted earnings per share of $2.98, which surpassed the analyst consensus estimate of $2.97. Alongside this, Darden's quarterly sales reached $3.27 billion, exceeding the predicted $3.26 billion. Notably, the company also experienced a consolidated same-restaurant sales increase of 4.6%. The growth was driven primarily by Olive Garden and LongHorn Steakhouse, which saw sales rises of 6.9% and 6.7%, respectively. However, the Fine Dining segment faced a 3.3% decline, while Other Business categories showed growth of 1.2%. Darden’s President and CEO, Rick Cardenas, stated that the company had a strong quarter characterized by sales and earnings growth that went beyond their expectations. He credited adherence to a robust strategy, which is based on competitive advantages and maintaining strong fundamentals, as the driving force behind the successful year. Looking ahead, Darden anticipates fiscal 2026 adjusted earnings per share between $10.50 and $10.70, which falls short of the $10.75 consensus estimate among analysts. They are also projecting a total sales growth of 7% to 8% for the year ahead. On the stock market, Darden shares saw a 5.1% decline, settling at $214.17 on Monday post-announcement. Following these earnings results, various analysts revealed adjustments to their price targets for Darden Restaurants. Jim Salera from Stephens & Co. maintained an Equal-Weight rating while increasing the price target from $200 to $212. Meanwhile, Baird’s David Tarantino also maintained a Neutral rating but raised the price target from $218 to $230. Keybanc's Eric Gonzalez maintained an Overweight rating and raised his price target significantly from $230 to $245. Furthermore, B of A Securities’ Sara Senatore kept a Buy rating and only slightly increased the target from $252 to $253. TD Securities analyst Andrew Charles maintained a Hold rating while adjusting the target upwards from $215 to $235. Barclays analyst Jeffrey Bernstein kept an Overweight rating with an increased target from $235 to $255. Lastly, Citigroup’s Jon Tower maintained a Buy rating, raising the price target from $245 to $253. The collective analysis indicates a cautious optimism about Darden’s trajectory following the latest financial disclosures.