Darden Restaurants, Inc.
Darden Restaurants, Inc. Fundamental Analysis
Darden Restaurants, Inc. (DRI) shows moderate financial fundamentals with a PE ratio of 22.08, profit margin of 8.92%, and ROE of 50.89%. The company generates $12.6B in annual revenue with moderate year-over-year growth of 8.60%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 52.3/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze DRI's fundamental strength across five key dimensions:
Efficiency Score
WeakDRI struggles to generate sufficient returns from assets.
Valuation Score
ModerateDRI shows balanced valuation metrics.
Growth Score
ModerateDRI shows steady but slowing expansion.
Financial Health Score
WeakDRI carries high financial risk with limited liquidity.
Profitability Score
ModerateDRI maintains healthy but balanced margins.
Key Financial Metrics
Is DRI Expensive or Cheap?
P/E Ratio
DRI trades at 22.08 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, DRI's PEG of 9.42 indicates potential overvaluation.
Price to Book
The market values Darden Restaurants, Inc. at 11.91 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 9.57 times EBITDA. This is generally considered low.
How Well Does DRI Make Money?
Net Profit Margin
For every $100 in sales, Darden Restaurants, Inc. keeps $8.92 as profit after all expenses.
Operating Margin
Core operations generate 11.61 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $50.89 in profit for every $100 of shareholder equity.
ROA
Darden Restaurants, Inc. generates $8.67 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Darden Restaurants, Inc. produces operating cash flow of $1.71B, showing steady but balanced cash generation.
Free Cash Flow
Darden Restaurants, Inc. generates strong free cash flow of $1.36B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $11.73 in free cash annually.
FCF Yield
DRI converts 5.45% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
22.08
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
9.42
vs 25 benchmark
P/B Ratio
Price to book value ratio
11.91
vs 25 benchmark
P/S Ratio
Price to sales ratio
1.98
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
3.08
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.39
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.51
vs 25 benchmark
ROA
Return on assets percentage
0.09
vs 25 benchmark
ROCE
Return on capital employed
0.14
vs 25 benchmark
How DRI Stacks Against Its Sector Peers
| Metric | DRI Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 22.08 | 24.85 | Better (Cheaper) |
| ROE | 50.89% | 1165.00% | Weak |
| Net Margin | 8.92% | 752.00% | Weak |
| Debt/Equity | 3.08 | 0.76 | Weak (High Leverage) |
| Current Ratio | 0.39 | 9.23 | Weak Liquidity |
| ROA | 8.67% | 1280.00% | Weak |
DRI outperforms its industry in 1 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Darden Restaurants, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
37.85%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
48.37%
Industry Style: Cyclical, Growth, Discretionary
High GrowthFCF CAGR
31.83%
Industry Style: Cyclical, Growth, Discretionary
High Growth