Darden Restaurants 2026 Q2 Earnings Strong Performance with 10.3% Net Income Growth

Darden Restaurants (DRI) reported Q2 2026 earnings on Dec 18, 2025, delivering a 7.3% revenue increase to $3.10 billion and a 12% rise in EPS to $2.05. The company exceeded revenue expectations while slightly missing EPS forecasts, and updated guidance to reflect 8.5–9.3% sales growth and $10.50–$10.70 adjusted EPS.

Revenue

Darden’s total revenue surged 7.3% year-over-year to $3.10 billion, driven by robust performance across all segments. Olive Garden led with $1.36 billion in sales, supported by promotions and delivery expansion, while LongHorn Steakhouse contributed $775.90 million, reflecting a 9.3% year-over-year increase. The Fine Dining segment posted $316.20 million, and the Other Business segment, including Yard House, grew by 11.3% to $647.30 million.

Earnings/Net Income

Net income rose 10.3% to $237.20 million, with EPS climbing 12% to $2.05. The EPS growth outperformed net income expansion, underscoring strong operational leverage despite commodity inflation pressures.

Post-Earnings Price Action Review

The strategy of buying Darden shares post-earnings and holding for 30 days yielded a 14.63% return, slightly trailing SPY’s 15.44%. While the return was robust, the lack of diversification exposed investors to sector-specific risks. Tactical adjustments, such as extending holding periods or rebalancing portfolios, could enhance risk-adjusted returns. The market’s positive reaction to revenue growth highlights confidence in Darden’s strategic initiatives.

CEO Commentary

CEO Ricardo Cardenas emphasized strong sales across all segments, noting Olive Garden’s lighter portions menu and first-party delivery as key drivers. He acknowledged near-term margin pressures from high beef prices but expressed confidence in sequential earnings growth in Q3 and Q4 as pricing aligns with inflation.

Guidance

CFO Rajesh Vennam updated fiscal 2026 guidance to 8.5–9.3% sales growth, 3.5–4.3% same-restaurant sales growth, and $10.50–$10.70 adjusted EPS. The company expects mid-single-digit EPS growth in Q3 and Q4, with capital spending of $750M–$775M and 65–70 new restaurant openings.

Additional News

Darden maintained its quarterly dividend at $1.50 per share, yielding 3.17%, and announced a $1.50 per share payout for shareholders of record on Jan 9. Institutional ownership remains strong at 95.09%, with analysts projecting a $218.66 target price. Insider selling activity, including 17 transactions totaling $7.7 million, raised scrutiny, though the company’s Piotroski F-Score of 8 underscores solid financial health.

The stock’s 12.28% month-to-date gain contrasts with recent insider sales, reflecting mixed signals for investors. Analysts remain cautiously optimistic, with 9 firms issuing “Buy” or “Overweight” ratings despite the EPS miss.

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