Darden Restaurants, Inc. DRI is scheduled to report first-quarter fiscal 2027 results on Sept. 24, before the opening bell.
In the last reported quarter, its earnings beat the Zacks Consensus Estimate by 0.8%. DRI’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, missed on two occasions and met once, with an average surprise of negative 0.3%.
Trend in the Estimate Revision of DRI
The Zacks Consensus Estimate for fiscal first-quarter earnings per share (EPS) is $2.06, up 4.6% from $1.97 in the year-ago quarter.
For revenues, the consensus estimate is $3.20 billion. The projection implies a 5.3% 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
Darden’s fiscal first-quarter 2027 revenues are likely to have benefited from its ability to attract customers across different income groups. The company’s emphasis on affordability and value is expected to have maintained dining frequency despite cautious consumer sentiment. Its diverse restaurant portfolio, covering casual dining and higher-growth concepts, provides multiple avenues for generating sales. Management’s same-restaurant sales growth outlook of 2.5-3.5% for fiscal 2027 reflects expectations for continued business expansion.
Restaurant development is another potential contributor to revenue growth. Darden plans to open 75-80 new restaurants and convert 11 Bahama Breeze locations during fiscal 2027. These initiatives should expand the company’s operating footprint and increase its sales capacity. LongHorn Steakhouse’s expansion plans are particularly important, as the brand offers significant growth potential within Darden’s portfolio.
Menu enhancements and improved customer experiences might have further strengthened sales. Olive Garden’s focus on faster service and smoother restaurant operations might have improved guest satisfaction and encouraged repeat visits. Meanwhile, new menu offerings and targeted marketing campaigns bode well.
Our model predicts revenues from Olive Garden and LongHorn Steakhouse to rise 6% and 8.8%, respectively, year over year to $1.38 billion and $844.5 million. We expect revenues from fine dining to increase 4.9% year over year to $300.6 million.
Darden’s fiscal first-quarter 2027 earnings are expected to have been supported by productivity improvements, careful expense management and operating leverage. Better labor efficiency might have helped contain rising wage costs, while revenue growth could spread fixed expenses across a larger sales base. However, commodity inflation of approximately 4% and certain near-term expenses are expected to have created pressure during the quarter. The company’s ability to balance pricing, cost control and customer value is expected to remain important for protecting profitability.
Darden Restaurants, Inc. Price and EPS Surprise
Darden Restaurants, Inc. price-eps-surprise | Darden Restaurants, Inc. Quote
What Our Model Says About DRI Stock
Our proven model does not 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 not the case here.
Earnings ESP for DRI: Darden has an Earnings ESP of -0.32%. 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.
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 have the right combination of elements to post an earnings beat.
The Cheesecake Factory Incorporated CAKE currently has an Earnings ESP of +25.86% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the to-be-reported quarter, CAKE’s earnings are expected to rise 27.9% year over year. CAKE’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.1%.
Domino's Pizza, Inc. DPZ has an Earnings ESP of +0.73% and a Zacks Rank of 3 at present.
In the to-be-reported quarter, Domino's earnings are expected to register 5.9% year-over-year growth. DPZ’s earnings missed estimates in the trailing three out of four quarters and beat once, with an average miss of 0.6%.
Shake Shack Inc. SHAK has an Earnings ESP of +6.62% and a Zacks Rank of 3 at present.
In the to-be-reported quarter, SHAK’s earnings are expected to register an 11.1% year-over-year decline. SHAK’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, with an average negative surprise of 10.6%.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
Of course, all our elite picks aren't winners, but this one could far surpass earlier Zacks' Stocks Set to Double like D-Wave Quantum, which shot up +680.1%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Darden Restaurants, Inc. (DRI): Free Stock Analysis Report
Domino's Pizza Inc (DPZ): Free Stock Analysis Report
The Cheesecake Factory Incorporated (CAKE): Free Stock Analysis Report
Shake Shack, Inc. (SHAK): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).