Darden Q2 Preview: Is The 'Unreasonably Cheap' Stock A Value Play?

Darden Restaurants Inc (NYSE:DRI) is likely to show visitor growth across its brands based on a traffic report when the company reports second-quarter financial results Thursday before market open. Here's a look at the earnings estimates, what analysts are saying ahead of the report, and key items to watch. Darden Earnings Estimates Analysts expect Darden Restaurants to report second-quarter revenue of $3.07 billion, up from $2.89 billion in last year's second quarter, according to data from Benzinga Pro. The company has missed analyst revenue estimates in eight of the last 10 quarters, including the most recently reported first quarter. Analysts expect Darden Restaurants to report second-quarter earnings per share of $2.10, up from $2.03 in last year's second quarter. The company has beaten analyst estimates for earnings per share in six of the last 10 quarters, while missing estimates in the most recently reported first quarter. Read Also: Top Stocks With Earnings This Week: Micron, FuelCell, Carnival and More What Analysts Are Saying Guggenheim analyst Gregory Francfort highlights Darden’s valuation relative to peers in a new investor note ahead of earnings. The analyst maintains a Buy rating while lowering the price target from $235 to $230. Francfort said Darden’s stock performance in 2025 has trailed other restaurant companies. High single-digit growth expected for the company would create a price-to-earnings multiple of 16.6x. "We believe is too low for a high quality restaurant business with robust top and bottom line growth," Francfort said of the PE ratio. The analyst said the second fiscal quarter could see peak cost inflation, with beef accounting for a smaller share of Darden's restaurants’ cost of goods than at some peers. Francfort said the restaurant sector has been challenging, and stocks like Darden have underperformed the S&P 500. "But we also think DRI's shares have gotten unreasonably cheap vs the market." The analyst expects the company to grow earnings per share by 8% over the next two years. Francfort also sees some of Darden's smaller restaurant brands contributing to future growth. "Darden has also gotten Cheddar's and Yard House's store economics into a place where both can contribute to unit growth going forward, helping to diversify the growth opportunity and also resetting up the pace of unit growth." Here are other recent analyst ratings on Darden stock and their price targets: Jefferies: Maintained Hold rating, lowered price target from $210 to $200 Morgan Stanley: Maintained Overweight rating, lowered price target from $238 to $236 Stephens & Co: Maintained Equal Weight rating, lowered price target from $215 to $205 Evercore ISI Group: Maintained Outperform rating, lowered price target from $2440 to $225 Key Items to Watch Darden reported double-digit sales growth in the first fiscal quarter, which ended Aug. 24, driven by acquisitions and same-store sales growth. Revenue and earnings per share came in shy of analyst estimates. Analysts and investors will be looking for Darden to report year-over-year growth in the second quarter, helped by visits growth, same-store sales growth and new unit growth. The company's Olive Garden brand led the way in the first quarter, with same-restaurant sales growth of 5.9% year over year. A report from Placer.ai shows Olive Garden visits up 6.1% in August, up 2.2% in September and up 3.6% in October on a year-over-year basis. The company's LongHorn Steakhouse and Cheddar's Scratch Kitchen brands also saw strong visitor growth. LongHorn visits were up 5.7%, up 3.3% and up 8.2% in August, September and October respectively. Cheddar's Scratch Kitchen visits were up 4.4%, up 0.6% and up 4.5% in August, September, and October, respectively. Overall, traffic for Darden's brands was up 3% in the calendar third quarter on a year-over-year basis. Darden's fiscal second quarter will include part of August, all of September, all of October and part of November. Darden raised their fiscal 2026 sales outlook after the first-quarter report, while keeping its fiscal 2026 earnings per share guidance. Analysts and investors will be looking to see if this guidance remains in place or is changed after the second quarter results. DRI Price Action: Darden stock is up 2.7% to $190.56 on Tuesday versus a 52-week trading range of $159.67 to $228.27. Darden shares are up 2.1% year-to-date in 2025. Read Next: Darden Restaurants Posts Q1 Sales Beat, Analysts Cut Price Target On Profitability Concerns Image: Shutterstock