What Happened?
Shares of restaurant company Darden (NYSE:DRI) fell 9.5% in the morning session after the company reported third-quarter results that fell short of Wall Street's profit expectations.
The owner of Olive Garden and other restaurant chains posted adjusted earnings of $1.97 per share, just missing the average analyst estimate of $2.01 per share. While total sales grew 10.4% to about $3.04 billion, driven by a 4.7% increase in sales at established restaurants, the failure to meet profit targets appeared to unnerve investors. The company also provided its full-year earnings guidance of $10.50 to $10.70 per share. The midpoint of this forecast was slightly below analyst expectations, offering little reassurance to the market and contributing to the stock's sharp decline.
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What Is The Market Telling Us
Darden’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 14.7% on the news that the company reported strong third-quarter results, which exceeded analysts' same-store sales expectations, leading to a revenue beat while EPS was roughly in line.
The company recorded growth across its four largest brands–Olive Garden, LongHorn Steakhouse, Yard House, and Cheddar's Scratch Kitchen, demonstrating that the solid result was broad-based. Its full-year revenue guidance also came in slightly higher than Wall Street's estimates. Overall, this quarter had some key positives.
Darden is up 1.9% since the beginning of the year, but at $189.98 per share, it is still trading 15.9% below its 52-week high of $225.78 from June 2025. Investors who bought $1,000 worth of Darden’s shares 5 years ago would now be looking at an investment worth $2,112.
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