Darden Restaurants (DRI): Exploring Valuation After Olive Garden’s Lighter Menu Rollout and Customer Response

Olive Garden, owned by Darden Restaurants (DRI), recently rolled out a lighter portion menu at nearly half of its locations. The company cited positive customer response, as well as rising affordability and satisfaction levels, in its latest earnings call.

See our latest analysis for Darden Restaurants.

Following the rollout of lighter portions at Olive Garden and efforts to boost value for diners, Darden Restaurants' share price has been choppy in the short term, with a 1-month decline of 10.76 percent, but underlying momentum remains strong. Over the past year, Darden delivered a robust 17.57 percent total shareholder return, and its 5-year total return has soared by nearly 120 percent. This is evidence of resilience and long-term growth for investors keeping an eye on both value and consistency.

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With solid long-term returns and a recent pullback, is Darden Restaurants' stock trading at a discount that offers upside? Or are investors already paying up for the company’s future growth potential?

Most Popular Narrative: 16.6% Undervalued

Darden Restaurants' most closely followed narrative pegs its fair value well above the last close, suggesting upside potential driven by strategic advances and earnings strength. This view sets the stage for a deeper look at the catalysts pushing growth and what could shape future returns.

Darden is testing new smaller prototypes for some brands, such as Yard House and Cheddar's Scratch Kitchen. These prototypes lower construction costs and expedite new restaurant openings, enabling a potential acceleration in unit growth. This should enhance revenue and earnings.

Read the complete narrative.

Curious what numbers support this aggressive valuation target? The key focus behind this narrative is accelerating restaurant expansion and higher margins. Want to see exactly which future profit and sales assumptions are driving this fair value? Unlock the full story and see why analysts think this stock could run higher.

Result: Fair Value of $224.86 (UNDERVALUED)

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

However, risks such as declining guest counts and rising operational complexity from delivery could pressure both revenue growth and net margins in the future.

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

Build Your Own Darden Restaurants Narrative

If you'd rather dive into the numbers personally or have your own take on Darden Restaurants, you can craft a narrative of your own in just a few minutes. Do it your way.

A great starting point for your Darden Restaurants research is our analysis highlighting 4 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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