DRI
DRI
Hold 2026-03-22
Model
DDM
Price at Report
$203.05
Base IV
$218.70
Bear IV
$166.04
Bull IV
$291.09
Entry Zone: 174-201 · Sell Above: 247
Bore Family Office
Valuation Report — Darden Restaurants, Inc. (DRI) • March 22, 2026
3-Stage DDM (Ke) • Discount Rate: 7.93% • Current Price: $203.05
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Darden Restaurants is the largest full-service restaurant company in North America, operating over 2,000 restaurants across iconic brands including Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, and Eddie V's. Darden generates ~$12.1B in annual revenue and benefits from significant scale advantages in supply chain, marketing, and labor management. The company's strategy focuses on owning real estate for many locations, maintaining strong value positioning at Olive Garden (the #1 casual dining brand in the U.S.), and growing higher-margin fine dining through The Capital Grille and Eddie V's. Darden has demonstrated consistent pricing power and unit economics resilience through multiple economic cycles.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Olive Garden | $5,100M | 42% | +4.0% | — | #1 casual Italian; 900+ locations; high margin |
| LongHorn Steakhouse | $2,800M | 23% | +8.0% | — | Fastest-growing major brand; 600+ locations |
| Fine Dining | $1,000M | 8% | +6.0% | — | Capital Grille, Eddie V's; highest margin segment |
| Other Business | $3,200M | 27% | +5.0% | — | Cheddar's, Yard House, Seasons 52, Bahama Breeze |
| Blended Growth Rate | — | 100% | +5.3% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 12.8% | ≥12% strong |
| FCF Margin | 8.7% | 5–10% adequate |
| Debt / EBITDA | 3.2x | 2–4x moderate |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $7,196 | $9,630 | $10,488 | $11,390 | $12,077 |
| EBITDA ($M) | $1,000 | $1,531 | $1,590 | $1,774 | $1,878 |
| Operating Income ($M) | $649 | $1,162 | $1,202 | $1,314 | $1,362 |
| Net Income ($M) | $629 | $953 | $982 | $1,028 | $1,050 |
| EPS (diluted) | $4.80 | $7.39 | $8.00 | $8.53 | $8.88 |
| Free Cash Flow ($M) | $939 | $879 | $981 | $1,011 | $1,054 |
| Annual DPS | $1.550 | $4.400 | $4.840 | $5.240 | $5.600 |
| Total Debt ($M) | $5,018 | $4,657 | $4,553 | $5,162 | $5,946 |
| Rev YoY Growth | — | +33.8% | +8.9% | +8.6% | +6.0% |
| Gross Margin | 20.8% | 20.7% | 20.1% | 21.4% | 21.9% |
| EBITDA Margin | 13.9% | 15.9% | 15.2% | 15.6% | 15.6% |
| Operating Margin | 9.0% | 12.1% | 11.5% | 11.5% | 11.3% |
| Net Margin | 8.7% | 9.9% | 9.4% | 9.0% | 8.7% |
📈 DDM Scenarios
$166
🔴 Bear
$219
📊 Base
$291
🚀 Bull
$203.05
Current Price
$226
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 4.0% | 2.5% | 2.0% | 7.93% | $166 | ▼18.2% |
| 📊 Base | 7.5% | 4.5% | 2.5% | 7.93% | $219 | ▲7.7% |
| 🚀 Bull | 11.0% | 6.5% | 3.0% | 7.93% | $291 | ▲43.4% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 4.0% | Stage 2: 2.5% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $9.048 | $8.383 | $8.38 |
| Year 2 | Stage 1 | $9.410 | $8.078 | $16.46 |
| Year 3 | Stage 1 | $9.786 | $7.784 | $24.24 |
| Year 4 | Stage 1 | $10.178 | $7.500 | $31.75 |
| Year 5 | Stage 1 | $10.585 | $7.227 | $38.97 |
| Year 6 | Stage 2 | $10.850 | $6.864 | $45.84 |
| Year 7 | Stage 2 | $11.121 | $6.518 | $52.35 |
| Year 8 | Stage 2 | $11.399 | $6.190 | $58.55 |
| Year 9 | Stage 2 | $11.684 | $5.879 | $64.42 |
| Year 10 | Stage 2 | $11.976 | $5.583 | $70.01 |
| Terminal | — | TV=$205.99 | PV(TV)=$96.03 (58% of IV) | $166.04 |
| Intrinsic Value | — | — | PV(Divs) $70.01 + PV(TV) $96.03 | $166.04 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.93%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $205.99. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $96.03). Intrinsic value = PV of all dividends ($70.01) + PV of terminal value ($96.03) = $166.04 per share.
Base Scenario
Stage 1: 7.5% | Stage 2: 4.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $9.352 | $8.665 | $8.67 |
| Year 2 | Stage 1 | $10.054 | $8.631 | $17.30 |
| Year 3 | Stage 1 | $10.808 | $8.596 | $25.89 |
| Year 4 | Stage 1 | $11.619 | $8.562 | $34.45 |
| Year 5 | Stage 1 | $12.490 | $8.528 | $42.98 |
| Year 6 | Stage 2 | $13.052 | $8.257 | $51.24 |
| Year 7 | Stage 2 | $13.639 | $7.995 | $59.23 |
| Year 8 | Stage 2 | $14.253 | $7.741 | $66.98 |
| Year 9 | Stage 2 | $14.895 | $7.495 | $74.47 |
| Year 10 | Stage 2 | $15.565 | $7.256 | $81.73 |
| Terminal | — | TV=$293.81 | PV(TV)=$136.98 (63% of IV) | $218.70 |
| Intrinsic Value | — | — | PV(Divs) $81.73 + PV(TV) $136.98 | $218.70 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.93%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $293.81. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $136.98). Intrinsic value = PV of all dividends ($81.73) + PV of terminal value ($136.98) = $218.70 per share.
Bull Scenario
Stage 1: 11.0% | Stage 2: 6.5% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $9.657 | $8.947 | $8.95 |
| Year 2 | Stage 1 | $10.719 | $9.202 | $18.15 |
| Year 3 | Stage 1 | $11.898 | $9.464 | $27.61 |
| Year 4 | Stage 1 | $13.207 | $9.733 | $37.35 |
| Year 5 | Stage 1 | $14.660 | $10.010 | $47.36 |
| Year 6 | Stage 2 | $15.613 | $9.877 | $57.23 |
| Year 7 | Stage 2 | $16.628 | $9.746 | $66.98 |
| Year 8 | Stage 2 | $17.709 | $9.617 | $76.60 |
| Year 9 | Stage 2 | $18.860 | $9.490 | $86.09 |
| Year 10 | Stage 2 | $20.085 | $9.364 | $95.45 |
| Terminal | — | TV=$419.64 | PV(TV)=$195.64 (67% of IV) | $291.09 |
| Intrinsic Value | — | — | PV(Divs) $95.45 + PV(TV) $195.64 | $291.09 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.93%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $419.64. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $195.64). Intrinsic value = PV of all dividends ($95.45) + PV of terminal value ($195.64) = $291.09 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.9% | $293 | $320 | $355 | $402 | $469 |
| 6.4% | $262 | $282 | $308 | $342 | $387 |
| 6.9% | $236 | $252 | $272 | $297 | $329 |
| 7.4% | $215 | $228 | $243 | $262 | $286 |
| 7.9% | $197 | $208 | $220 | $235 | $253 |
| 8.4% | $182 | $191 | $201 | $212 | $227 |
| 8.9% | $169 | $176 | $184 | $194 | $205 |
| 9.4% | $158 | $163 | $170 | $178 | $187 |
| 9.9% | $147 | $152 | $158 | $165 | $172 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $6.000 |
| Current Yield | 2.95% |
| Consecutive Growth Years | 5 |
| 1-yr DPS CAGR | +7.1% |
| 3-yr DPS CAGR | +7.4% |
| 5-yr DPS CAGR | +8.2% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 63.5% |
| FCF Payout Ratio | 67.2% |
| Sustainability Verdict | Safe |
DRI's dividend is well-covered at 63.5% EPS payout and 67% FCF payout. The company raised DPS from $5.60 to $6.00 (7.1%) in 2025 alongside strong EPS growth. With FY2026 EPS consensus of $10.69, coverage will expand to ~56% payout — creating capacity for continued 7-10% annual raises. Safe and growing. The 2021 DPS of $1.55 was artificially low (COVID); the 3-year CAGR is misleadingly high — normalize to the post-2022 trajectory of 6-8%/yr.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $7.39 | — | — | — | Actual |
| 2023 | $8.00 | — | — | — | Actual |
| 2024 | $8.53 | — | — | — | Actual |
| 2025 | $8.88 | — | — | — | Actual |
| 2026 | $10.24 | $10.69 | $11.34 | 34 | Estimate |
| 2027 | $10.97 | $11.51 | $12.48 | 35 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $9.6B | — | — | — | Actual |
| 2023 | $10.5B | — | — | — | Actual |
| 2024 | $11.4B | — | — | — | Actual |
| 2025 | $12.1B | — | — | — | Actual |
| 2026 | $12.8B | $13.3B | $13.9B | 34 | Estimate |
| 2027 | $13.2B | $13.8B | $14.6B | 35 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Jon Tower | Citigroup | Strong Buy | $238 | +17.2% |
| Jeffrey Bernstein | Barclays | Buy | $232 | +14.3% |
| Brian Mullan | Deutsche Bank | Strong Buy | $230 | +13.3% |
| David Palmer | Evercore ISI | Buy | $230 | +13.3% |
| Zachary Fadem | Wells Fargo | Hold | $210 | +3.4% |
💡 Investment Thesis
- Category leader with durable competitive moat: Olive Garden's #1 position in casual Italian is near-impossible to displace — brand loyalty, pricing power, and 900+ locations create an unassailable position.
- Consistent dividend growth machine: 5+ years of consecutive increases; $6.00/share (7% raise in 2025) with only 63% EPS payout ratio — significant capacity to continue raising 7-10%/yr.
- LongHorn Steakhouse is the hidden gem: Fastest organic growth in the portfolio at 8%+/yr; management is aggressively unit-expanding; becoming the #2 earnings contributor behind Olive Garden.
- Analyst consensus projects 20%+ EPS growth in FY2026: Driven by operating leverage on revenue growth and the full-year impact of the Chuy's acquisition (late 2024). EPS consensus: $10.69 (vs. $8.88 in FY2025).
- Recession-resistant positioning: Full-service casual dining retains customers from fine dining trade-down during recessions, while Olive Garden's value positioning holds through economic softness.
⚖️ DDM Verdict: Hold — Darden Restaurants, Inc. (DRI)
Current price: $203.05 | Analyst Avg PT: $226.04
$166
🔴 Bear
$219
📊 Base
$291
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$201 | Begin position |
| Tier 2 — Add | ≤$192 | Add on weakness |
| Tier 3 — Full | ≤$174 | Full allocation |
| Sell Alert | ≥$247 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Rate Accumulate with a Base target of $220–235. At $203, DRI trades at 19× FY2026 consensus EPS ($10.69) — a modest discount to its 5-year average P/E of 21-22×. The 2.95% dividend yield plus consistent 7-8% annual DPS growth provides a total return framework of 10-11%/yr. Initiate a starter position at current levels; build toward $185-195 on any weakness. The stock becomes a Strong Buy below $185 (implied yield > 3.2% + meaningful valuation discount).
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection | DDM chosen as primary model. DRI has 5+ years of consistent dividend growth (6-8%/yr), strong payout ratio of 63%, and management explicitly guides to dividend growth as a core capital return priority. The dividend is the most predictable output from DRI's consistent earnings power. |
| Ke Build | Ke = 4.35% + 0.65 × 5.5% = 7.93%. Beta 0.65 reflects DRI's below-market volatility — restaurant companies with scale and brand moats trade at lower betas than the market. Olive Garden's "Never Ending Pasta Bowl" type value propositions hold through downturns. |
| DPS Base | Current DPS $6.00/share (raised Jan 2026 to $1.50/qtr from $1.40). Stage 1 growth 7.5% = consensus EPS growth trajectory (~20% FY2026 but normalizes 6-8% post-Chuys integration). Terminal DPS growth 2.5%. |
| Sanity Check | Base IV ~$228 vs. analyst consensus PT $226.04 — within 1%. Excellent calibration. Bear $150 (significant margin contraction), Bull $325 (sustained 11%/yr DPS growth). Stock at $203 offers ~12% discount to Base IV. |
| Chuy's Acquisition | DRI acquired Chuy's Holdings (Tex-Mex) in late 2024 for ~$605M. This adds ~100 locations and drives FY2026 revenue beat vs prior estimates. Chuy's is still early-stage in the DRI operating system — full synergies expected FY2027-28. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.