📊 DRI Key Takeaways
Is Darden Restaurants Inc. (DRI) a Good Investment?
Darden demonstrates exceptional profitability with net income growing 15% YoY, outpacing revenue growth of 9.4%, and delivering a remarkable 54.7% ROE. Strong operating margins of 12% and excellent 31.5x interest coverage indicate robust business fundamentals and manageable debt. However, critically low liquidity ratios (0.31x current, 0.21x quick) and limited cash reserves of $219.5M against significant capital requirements warrant close monitoring of cash generation.
Darden Restaurants shows solid core fundamentals with steady 6.0% revenue growth, healthy 10.7% operating margins, and strong interest coverage of 13.1x, indicating a durable and profitable operating model. However, earnings growth is modest relative to sales growth, liquidity is notably weak with a 0.39x current ratio, and the absence of operating cash flow and free cash flow data limits confidence in the quality of reported earnings.
Darden Restaurants Inc. Key Strengths (DRI)
- Exceptional ROE of 54.7% demonstrates highly efficient capital deployment and shareholder value creation
- Net income growth (15% YoY) significantly outpacing revenue growth (9.4%) indicates improving operational efficiency and margin expansion
- Strong EPS growth of 17.2% exceeding net income growth suggests effective capital allocation through buybacks or share count reduction
- Excellent interest coverage ratio of 31.5x provides substantial debt service safety and financial flexibility
- Solid operating margin of 12% is healthy for the restaurant industry and reflects competitive operational strength
- Consistent top-line growth with positive YoY gains in revenue, net income, and diluted EPS
- Healthy restaurant-level profitability reflected in 18.8% gross margin, 10.7% operating margin, and 8.1% net margin
- Manageable leverage profile supported by 13.1x interest coverage and strong 23.8% ROE
DRI Stock Risks: Darden Restaurants Inc. Investment Risks
- Severely low current ratio (0.31x) and quick ratio (0.21x) create potential liquidity stress despite restaurant industry norms for negative working capital
- Limited cash position of $219.5M coupled with annual capex of $734M creates dependence on operating cash flow and credit facilities with minimal buffer
- High absolute debt levels ($1.6B long-term) relative to modest equity base ($2.2B) increases financial risk in economic downturns
- Missing operating and free cash flow data prevents assessment of actual cash generation quality and sustainability of growth investments
- Working capital structure leaves no margin for error in operations or revenue disruptions
- Very weak liquidity with low current and quick ratios, leaving less balance-sheet flexibility
- Profit growth is lagging revenue growth, which may indicate cost pressure or margin compression risk
- Cash flow quality is harder to assess because operating cash flow and free cash flow are unavailable
Key Metrics to Watch
- Operating cash flow and free cash flow trends—essential to validate profitability translates to actual cash generation
- Current ratio and working capital dynamics—monitor if liquidity tightens further or improves
- Debt-to-EBITDA ratio—track leverage sustainability given capital-intensive model
- Same-store sales growth—key indicator of organic business momentum beyond total revenue
- Cash conversion cycle—critical given thin liquidity to ensure vendor and operational payment reliability
- Operating cash flow and free cash flow generation relative to net income
- Operating margin trend and same-store sales growth versus debt and liquidity levels
Darden Restaurants Inc. (DRI) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The current ratio below 1.0x warrants monitoring of short-term liquidity.
DRI Profit Margin, ROE & Profitability Analysis
DRI vs Consumer Sector: How Darden Restaurants Inc. Compares
How Darden Restaurants Inc. compares to Consumer sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Darden Restaurants Inc. Stock Overvalued? DRI Valuation Analysis 2026
Based on fundamental analysis, Darden Restaurants Inc. has mixed fundamental signals relative to the Consumer sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Darden Restaurants Inc. Balance Sheet: DRI Debt, Cash & Liquidity
DRI Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Darden Restaurants Inc.'s revenue has grown significantly by 37% over the 5-year period, indicating strong business expansion. The most recent EPS of $8.51 reflects profitable operations.
DRI Revenue Growth, EPS Growth & YoY Performance
DRI Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2026 | $3.2B | $306.8M | $2.65 |
| Q2 2026 | $2.9B | $215.1M | $1.82 |
| Q1 2026 | $2.8B | $207.2M | $1.74 |
| Q3 2025 | $3.0B | $312.9M | $2.60 |
| Q2 2025 | $2.7B | $212.1M | $1.76 |
| Q1 2025 | $2.7B | $194.5M | $1.59 |
| Q3 2024 | $2.8B | $286.6M | $2.34 |
| Q2 2024 | $2.5B | $187.2M | $1.52 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Darden Restaurants Inc. Dividends, Buybacks & Capital Allocation
DRI SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Darden Restaurants Inc. (CIK: 0000940944)
📋 Recent SEC Filings
❓ Frequently Asked Questions about DRI
What is the AI rating for DRI?
Darden Restaurants Inc. (DRI) has a Combined AI Grade of A from Claude (A) and ChatGPT (B) with 77% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are DRI's key strengths?
Claude: Exceptional ROE of 54.7% demonstrates highly efficient capital deployment and shareholder value creation. Net income growth (15% YoY) significantly outpacing revenue growth (9.4%) indicates improving operational efficiency and margin expansion. ChatGPT: Consistent top-line growth with positive YoY gains in revenue, net income, and diluted EPS. Healthy restaurant-level profitability reflected in 18.8% gross margin, 10.7% operating margin, and 8.1% net margin.
What are the risks of investing in DRI?
Claude: Severely low current ratio (0.31x) and quick ratio (0.21x) create potential liquidity stress despite restaurant industry norms for negative working capital. Limited cash position of $219.5M coupled with annual capex of $734M creates dependence on operating cash flow and credit facilities with minimal buffer. ChatGPT: Very weak liquidity with low current and quick ratios, leaving less balance-sheet flexibility. Profit growth is lagging revenue growth, which may indicate cost pressure or margin compression risk.
What is DRI's revenue and growth?
Darden Restaurants Inc. reported revenue of $13.2B.
Does DRI pay dividends?
Darden Restaurants Inc. pays dividends, with $693.0M distributed to shareholders in the trailing twelve months.
Where can I find DRI SEC filings?
Official SEC filings for Darden Restaurants Inc. (CIK: 0000940944) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is DRI's EPS?
Darden Restaurants Inc. has a diluted EPS of $10.38.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined grade reflects both perspectives for balanced insights.
What is DRI's fundamental grade?
Based on our AI fundamental analysis in August 2026, Darden Restaurants Inc. has a A grade with 77% confidence. The AI analysis suggests favorable fundamentals based on SEC filings. This is not investment advice.
Is DRI stock overvalued or undervalued?
Valuation metrics for DRI: ROE of 54.7% (sector avg: 18%), net margin of 9.1% (sector avg: 8%). Higher ROE suggests strong returns relative to peers.
What is DRI's AI grade for 2026?
Our dual AI analysis gives Darden Restaurants Inc. a combined A grade for 2026. Revenue is data pending, with profitability above sector average. Always conduct your own research.
What is DRI's free cash flow?
Darden Restaurants Inc.'s operating cash flow is N/A, with capital expenditures of $734.0M.
How does DRI compare to other Consumer stocks?
Vs Consumer sector averages: Net margin 9.1% (avg: 8%), ROE 54.7% (avg: 18%), current ratio 0.31 (avg: 1.5).
Why is DRI's return on equity (ROE) so high?
Darden Restaurants Inc. has a return on equity of 54.7%, significantly above the Consumer sector average of 18%. A high ROE indicates the company is efficient at generating profits from shareholder equity. This is supported by a 9.1% net margin.