🍝 Darden Restaurants (DRI): stable growth in a volatile sector? Evercore says yes.
📈 Why does Evercore have confidence?
- Long-term stability and brand
Olive Garden (45% of sales) and LongHorn (25%) are strong brands with a loyal customer base. This allows us to predict sustainable growth without dramatic fluctuations. - Innovation without the risk of over-expansion
- Using Uber Direct for food delivery
- Cheaper meal options for the more sensitive segment
- Optimization of smaller brands (e.g. Bahama Breeze - strategy review)
- Access to shareholders
- Reinvestment in development and share buybacks
- Despite margin pressure, EBIT margin is expected to grow by 35 bps
- Strong performance even in a challenging environment
- SSS up 4.6% in Q4 fiscal, Olive Garden up +6.9%
- At a time when other chains are struggling with declining sales
🧠 SWOT analysis of Darden Restaurants:
🔎 Valuation and investment attractiveness:
📌 Target price of $250 is considered conservatively realistic given the growth profile and consistent $DRIperformance .
✅ Who is DRI attractive to?
✅ Yes, if:
- You are looking for a defensive growth title with a dividend
- you believe in brand strength and operational discipline
- you are looking for a company with lower volatility than tech stocks
- you prefer cash-flow positive companies with buybacks
❌ Think twice if:
- you expect rapid expansion or aggressive growth
- you don't want to be exposed to US consumer spending
- you're looking for a cheap P/E (21x is fair, but not cheap)
🗣️ Summary:
"Darden $DRI is not a sexy growth story. It's a steady yield machine - and in a sector where surviving means winning."
"If you want to invest in something that moves slowly but surely - DRI is like Olive Garden: not always exciting, but you can always count on it."
It's not great, but $CAVA is an interesting business too and the performance is great.
It doesn't look bad, but I already have $MCD in my portfolio and I think it's a much better business.