Darden Restaurants, Inc. DRI is scheduled to report fourth-quarter fiscal 2026 results on June 25, before the opening bell.
In the last reported quarter, earnings met the Zacks Consensus Estimate, while revenues beat the same by 0.5%. DRI’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, missed on two occasions, and met on one occasion, with an average surprise of negative 0.3%.
Trend in the Estimate Revision of DRI
The Zacks Consensus Estimate for fiscal fourth-quarter earnings per share (EPS) is $3.63, up 21.8% from $2.98 in the year-ago quarter.
Darden Restaurants, Inc. Price and EPS Surprise
Darden Restaurants, Inc. price-eps-surprise | Darden Restaurants, Inc. Quote
For revenues, the consensus estimate is $3.73 billion. The projection implies a 14.2% rise from the year-ago quarter’s reported figure.
Let us take a look at how things might have shaped up in the quarter to be reported.
Factors Likely to Shape Darden’s Quarterly Results
Revenues
Darden’s fiscal fourth-quarter performance is likely to have benefited from continued same-restaurant sales momentum across its portfolio, led by Olive Garden and LongHorn Steakhouse. Sales trends remained strong through the first three weeks of March, and management projected same-restaurant sales growth of 3.5%-5% for the quarter under review.
Olive Garden’s initiatives are expected to have supported guest traffic and sales growth in the to-be-reported quarter. The recently expanded lighter-portion menu, which added seven dishes priced below $15, has been generating higher guest frequency, stronger value scores and improved portion-size satisfaction ratings. Management also highlighted positive guest response to the Buy One, Take One promotion, which was extended by an additional week this year and supported with increased media spending.
LongHorn Steakhouse is likely to have remained a major growth driver. The brand posted 7.2% same-restaurant sales growth in the fiscal third quarter, aided by strong traffic gains, consistent food quality and favorable consumer value perception. Management emphasized that LongHorn continues to benefit from operational excellence and strong guest loyalty, trends that likely continued into the fiscal fourth quarter.
Fine Dining is also expected to have remained strong, supported by robust private dining demand at The Capital Grille and Eddie V’s, as well as continued traction from Ruth’s Chris Steak House’s fixed-price menu. Additionally, delivery and catering initiatives, particularly at Olive Garden, are likely to have supported top-line growth. New restaurant openings are also expected to have contributed to revenue growth. Darden opened 16 restaurants during the fiscal third quarter and remains on track to open approximately 70 new locations in fiscal 2026. The company’s updated outlook calls for total sales growth of approximately 9.5% for the year.
Our model predicts revenues from Olive Garden and LongHorn Steakhouse to rise 11% and 16%, respectively, year over year to $1.53 billion and $967.1 million. We expect revenues from fine dining to increase 7.1% year over year to $358.4 million.
Margins
Darden’s earnings performance in the fiscal fourth quarter is expected to have benefited from productivity improvements, labor efficiencies and sales leverage. In the previous quarter, restaurant labor benefited from productivity gains, while strong same-restaurant sales growth helped offset inflationary pressures. Continued traffic gains and disciplined cost management are likely to have supported profitability in the to-be-reported quarter.
Darden’s pricing strategy may also have weighed on margins. Management expects commodity inflation of approximately 4% for fiscal 2026, with beef remaining the primary cost headwind. In addition, ongoing investments in marketing, delivery capabilities and menu initiatives, including Olive Garden’s lighter-portion offerings, are likely to have weighed modestly on restaurant-level margins.
What Our Model Says About DRI Stock
Our proven model does conclusively predict an earnings beat for Darden this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is exactly the case here.
Earnings ESP for DRI: Darden has an Earnings ESP of +0.28%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Darden’s Zacks Rank: The company currently has a Zacks Rank #3.
Other Stocks Poised to Beat on Earnings
Here are some stocks from the Zacks Retail-Wholesale sector that investors may consider, as our model shows that these too have the right combination of elements to post an earnings beat.
CAVA Group, Inc. CAVA currently has an Earnings ESP of +2.71% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the to-be-reported quarter, CAVA’s earnings are expected to rise 6.3% year over year. CAVA’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average surprise being 16.6%.
Sweetgreen, Inc. SG has an Earnings ESP of +23.08% and a Zacks Rank of 3 at present.
In the to-be-reported quarter, Sweetgreen’s earnings are expected to register 35% year-over-year growth. Sweetgreen’s earnings missed estimates in each of the trailing four quarters, with an average miss of 42.4%.
BJ's Restaurants, Inc. BJRI has an Earnings ESP of +4.96% and a Zacks Rank of 3 at present.
In the to-be-reported quarter, BJRI earnings are expected to register an 11.3% year-over-year decline. BJRI’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, with an average surprise of 136%.
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BJ's Restaurants, Inc. (BJRI): Free Stock Analysis Report
Darden Restaurants, Inc. (DRI): Free Stock Analysis Report
Sweetgreen, Inc. (SG): Free Stock Analysis Report
CAVA Group, Inc. (CAVA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).