Q4 Feast Ahead? Analysts Bet On Olive Garden To Boost Darden

Ahead of Darden Restaurants' Q4 earnings release on June 20, analysts from Truist Securities and Oppenheimer reiterated bullish ratings, citing expected earnings upside driven by Olive Garden's delivery growth and margin strength. Truist anticipates Olive Garden's same-store sales to rise 6.5%, exceeding the 4.5% consensus, and raised its FY26 EPS forecast to $11.05; Oppenheimer also expects continued earnings upside into FY26, particularly from Olive Garden, despite the stock's year-to-date outperformance.

Analysis

Darden Restaurants (DRI) is approaching its fourth-quarter earnings release on June 20 with bullish sentiment from analysts at Truist Securities and Oppenheimer, who both reiterated positive ratings and increased price targets—Truist to $252 and Oppenheimer to $250. Truist Securities anticipates a strong Q4 performance, with their card data indicating Olive Garden's same-store sales (SSS) rose 6.5%, significantly above the 4.5% consensus and likely investor expectations. Consequently, Truist raised its overall Q4 SSS estimate for Darden to +4.5% and its EPS forecast to $3.02, both exceeding consensus estimates of +3.6% and $2.96, respectively. They also project restaurant-level margins at 22.8%, a 60bps year-over-year increase. For fiscal year 2026, Truist forecasts a blended SSS of +3.8% and EPS of $11.05, driven by Olive Garden's delivery growth and recent advertising. Oppenheimer shares this optimism, citing continued earnings upside into FY26 due to Olive Garden's delivery momentum and a solid EBIT margin setup, despite the stock's substantial 20.4% year-to-date appreciation (versus 1.7% for the S&P 500) and its current 21x P/E multiple. Oppenheimer expects initial FY26 EPS guidance to be conservative, potentially around $10.77, but sees Olive Garden, constituting approximately 43% of Darden's sales, as a key driver for outperformance. Despite this positive analyst outlook, DRI shares were trading 0.93% lower at $222.62 on the day of the report.

Key Decisions for Investors

• Investors should closely monitor Darden's Q4 earnings release on June 20, focusing on Olive Garden's actual same-store sales figures and the company's official fiscal year 2026 guidance, particularly for EPS and margin outlook.
• Given the stock's significant year-to-date rally and elevated P/E ratio, investors should consider that much of the positive news may already be priced in, potentially limiting immediate upside even if results meet or slightly exceed heightened expectations.
• Assess the sustainability of Olive Garden's delivery-driven growth and management's commentary on new store openings versus margin expansion as key components of their 10%-15% total shareholder return target.