STKS - Darden Restaurants: At $200 Sit Back And Enjoy Your Dividends

2025-05-03 09:35:37 ET

Summary

• Darden Restaurants hit my price target with a 45% total return, driven by strategic menu additions and strong brand performance, especially Olive Garden and LongHorn Steakhouse.
• Despite industry challenges, Darden's Q3 FY 2025 revenue grew 6.16% YoY, with a notable 2.6% same-store sales growth, outperforming the industry average.
• The Uber Direct partnership boosted delivery volume by 40%-50%, and new lean prototypes for Cheddar's and Yard House are accelerating restaurant openings.
• With Darden shares trading near their 5-year average P/E, expect steady returns from dividends and share buybacks but limited short-term capital gains.

Finally, after babysitting my Darden Restaurants ( DRI ) call for what felt like half a year, we hit the inflection point: the stock finally reached my price target. It's a sweet time, but we got there.

If you jumped in at the market bottom on August 5th last year—as I flagged in my piece on discounted full-service restaurants—you’re already sitting on a 41.52% gain. And that’s before counting the $5.60 in dividends per share (which adds another 3.8% return, not even including buybacks)....

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