Is the Darden Restaurants Stock Performing Below the S&P 500?

Darden Restaurants, Inc. (DRI), based in Orlando, Florida, is a leading operator of several well-known dining brands across North America. The company manages popular chains such as Olive Garden, LongHorn Steakhouse, and The Capital Grille, offering a variety of Italian, steakhouse, and fine-dining options to millions of customers annually. With a market capitalization of $20.83 billion, Darden is classified as a large-cap company.

Recently, Darden's stock reached a 52-week high of $228.27 in June but has since fallen by 19.7%. This decline is primarily due to higher beef prices and a missed earnings target. Over the past three months, the stock has dropped by 14.1%, while the broader S&P 500 Index ($SPX) has seen a gain of 4.8% during the same period.

Looking at a longer time frame, the stock's underperformance continues. Over the past 52 weeks, Darden's stock has gained 9.2%, but it has dropped 15.8% over the last six months. In contrast, the S&P 500 has increased by 13.4% and 14.6% over the same periods. Additionally, Darden's stock has been trading below its 200-day moving average since mid-September and is currently close to its 50-day moving average.

On September 18, Darden released its fiscal Q1 2026 results (for the quarter ending August 24). The company reported a 10.4% year-over-year increase in sales, reaching $3.04 billion, which met analysts' expectations. Same-restaurant sales grew by 4.7%, with Olive Garden seeing a 5.9% increase. This growth was partly driven by the acquisition of 103 Chuys Tex-Mex restaurants and the addition of 22 new locations.

However, Darden's adjusted earnings per share (EPS) for the quarter was $1.97, which was a 12.6% increase from the same period last year but missed Wall Street's estimate of $2. As a result, the stock saw a 7.7% drop on the day of the earnings report. For fiscal 2026, the company is forecasting an adjusted EPS range of $10.50 to $10.70.

Comparing Darden to another restaurant chain, Yum! Brands, Inc. (YUM), reveals some contrasts. Over the past 52 weeks, Yum! Brands has gained 6.9%, and 3.3% over the last six months. Darden has outperformed Yum! Brands in the last year, but Yum! has performed better in the past six months.

Wall Street analysts hold a moderately optimistic outlook for Darden, with a consensus rating of "Moderate Buy" from 30 analysts. The average price target for the stock is $221.55, representing a 20.9% potential upside from its current price. The highest price target among analysts is $261, indicating a 42.4% upside potential.

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• Is Darden Restaurants Stock Underperforming the S&P 500?