Darden Restaurants beats earnings estimates, as Olive Garden parent predicts growth in 2026

Darden Restaurants (DRI) reported fiscal Q4 earnings of $2.98 per share on $3.27 billion in revenue, slightly exceeding expectations, and provided a FY26 revenue growth forecast of 7% to 8% with adjusted EPS between $10.50 and $10.70. Same-store sales rose 4.6%, driven by strong performances from Olive Garden (6.9% increase) and LongHorn Steakhouse (6.7% increase), while fine dining declined 3.3%; the board also authorized a $1 billion share repurchase program, sending shares up over 2% in premarket trading.

Analysis

Darden Restaurants reported fiscal fourth-quarter results that modestly surpassed Wall Street expectations, with adjusted earnings per share of $2.98 against an anticipated $2.97, and revenue of $3.27 billion versus $3.26 billion expected. This performance was supported by a 10.6% year-over-year increase in net sales, partly attributed to the acquisition of 103 Chuy's restaurants and the opening of 25 net new locations. Overall same-store sales growth of 4.6% exceeded the 3.5% StreetAccount estimate, primarily driven by strong consumer demand at its flagship Olive Garden and LongHorn Steakhouse brands, which posted same-store sales increases of 6.9% and 6.7% respectively, both beating forecasts. However, the company's fine dining segment experienced a notable same-store sales decline of 3.3%, significantly wider than the 0.2% decline anticipated. Looking ahead, Darden provided a robust outlook for fiscal year 2026, projecting revenue growth of 7% to 8% and adjusted earnings per share between $10.50 and $10.70; these figures include an approximate 2% revenue lift and 20 cents EPS benefit from an additional week in that fiscal year. The company's confidence is further underscored by the authorization of a new $1 billion share repurchase program, signaling a commitment to returning capital to shareholders. Despite broader concerns about consumer spending, management commentary suggests resilience in the dining-out category, particularly for Darden's core value and casual dining offerings, with shares reacting positively, up over 2% in premarket trading.

Key Decisions for Investors

• Investors may find Darden's strong performance in its Olive Garden and LongHorn Steakhouse brands, coupled with a positive fiscal 2026 outlook and a new $1 billion share repurchase program, supportive of a continued constructive view on the stock.
• Close attention should be paid to the fine dining segment's performance, as its 3.3% same-store sales decline signals potential headwinds or shifting consumer patterns at higher price points that could impact Darden's diversified portfolio.
• Given the stock's approximate 19% year-to-date increase and positive premarket reaction to the earnings, investors should assess whether the current valuation adequately reflects the outlined growth trajectory and capital return initiatives before initiating or adding to positions.