Darden Restaurants (DRI): Evaluating Valuation Following Upbeat Q1 Results and Updated 2026 Growth Outlook

For investors watching Darden Restaurants (DRI), the dust has barely settled on the company’s latest earnings report, and already the next big question is taking shape. First-quarter results showed sales and net income both climbing higher than last year, and management wasted no time reaffirming their guidance for even more growth into 2026. At the same time, Darden’s board declared another quarterly dividend and completed additional share buybacks, signaling confidence and a willingness to reward shareholders despite the ongoing debate about inflation and operating costs.

The shares have been anything but quiet lately, responding to these developments with a dip in the past month but holding onto solid gains for the year. While earnings came in slightly under some expectations, momentum at key brands like Olive Garden and new partnerships have helped underpin longer-term strength. Steady annual gains, over 12% in the past year and 67% across three years, suggest there’s faith in the strategy, even as near-term sentiment softens compared to earlier highs.

So, after this eventful quarter and shifting share price, is Darden Restaurants at a bargain or are investors simply paying up for future growth?

Most Popular Narrative: 17.1% Undervalued

The most widely followed narrative sees Darden Restaurants stock as significantly undervalued, with a projected upside based on future growth and profitability improvements.

Olive Garden's rollout of Uber Direct delivery service has been seamless and is now available in nearly all locations. This provides a meaningful sales-building opportunity over time as consumers increasingly opt for convenience, potentially boosting revenue and average check size.

Curious what’s driving this bullish outlook? There is a formula at play here: steady growth forecasts, bold margin improvement, and a valuation multiple that exceeds today’s market average. Do you want to discover the ambitious projections and powerful assumptions these analysts are betting on to back up such a high price target? Explore the details and see why this narrative could reshape how investors view Darden’s future.

Result: Fair Value of $224.86 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, declining guest counts and new operational complexities in delivery could challenge Darden’s bullish case if these trends deepen or if margins come under unexpected pressure.

Find out about the key risks to this Darden Restaurants narrative.

Another View: Discounted Cash Flow Perspective

Our SWS DCF model also suggests Darden could be undervalued, adding a second perspective to the story. However, every model relies on its own set of forecasts and assumptions, so which will really prove accurate?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Darden Restaurants for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Darden Restaurants Narrative

If you would rather chart your own path or question the prevailing stories, the tools are here to let you run the numbers and see your own results in just minutes. Do it your way

A great starting point for your Darden Restaurants research is our analysis highlighting 5 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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