Assessing Darden Restaurants (DRI) Valuation After Recent Share Price Strength

Simply Wall St.13:26

AdvertisementWhy Darden Restaurants stock is drawing attention now Darden Restaurants (DRI) has outpaced the broader restaurant space recently, with the stock showing gains over the past week, month ...

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The 3 year total shareholder return of 51.48% and 5...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0154245673.USD":"BNP PARIBAS US MID CAP \"C\" (USD) INC","BK4209":"餐馆","DRI":"达登饭店","BK4588":"碎股","BK4585":"ETF&股票定投概念","LU0154245756.USD":"BNP PARIBAS US MID CAP \"C\" (USD) ACC","BK4504":"桥水持仓"},"translate_title":"在近期股价走强后评估达顿餐厅(DRI)的估值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DRI":1.5},"content_text":"AdvertisementWhy Darden Restaurants stock is drawing attention now Darden Restaurants (DRI) has outpaced the broader restaurant space recently, with the stock showing gains over the past week, month and past 3 months that may prompt investors to reassess its valuation. See our latest analysis for Darden Restaurants. The share price, now at US$205.49, has been supported by a 1 month share price return of 9.76% and a 3 month share price return of 14.10%. The 3 year total shareholder return of 51.48% and 5 year total shareholder return of 86.83% point to momentum that has built over a longer horizon. If Darden’s recent move has you thinking about where else capital could work, this is a useful moment to broaden your research with fast growing stocks with high insider ownership. With Darden trading at US$205.49 and sitting at what some models view as roughly a 9% intrinsic discount, the key question is whether there is still a buying opportunity here or if the market is already pricing in future growth. Most Popular Narrative: 6.8% Undervalued Against Darden’s last close of $205.49, the most followed narrative points to a fair value of about $220.57, presenting a modest undervaluation story.  Darden is testing new smaller prototypes for some brands, such as Yard House and Cheddar's Scratch Kitchen. These prototypes lower construction costs and expedite new restaurant openings, enabling a potential acceleration in unit growth which should enhance revenue and earnings.  Read the complete narrative. Curious what kind of revenue path and margin profile sit behind that valuation gap? The narrative leans on measured growth, resilient profitability and a premium P/E assumption. The full story illustrates how those elements combine into that $220.57 fair value marker. Result: Fair Value of $220.57 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, the story could change if casual dining guest counts weaken further, or if delivery complexity and commodity costs start to pressure Darden’s margins. Find out about the key risks to this Darden Restaurants narrative.  Build Your Own Darden Restaurants Narrative If you look at the numbers and come to a different conclusion, or prefer to build your own view from the ground up, you can customise a full thesis in just a few minutes with Do it your way. A great starting point for your Darden Restaurants research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision. Looking for more investment ideas? If Darden is on your radar, treat this as a starting point and line up a few more ideas so you are not relying on a single story.  Spot potential mispricings by checking out these 873 undervalued stocks based on cash flows that may align with your preferred margin of safety. Ride long term themes by scanning these 25 AI penny stocks that link artificial intelligence with real business models. Strengthen your income watchlist by reviewing these 13 dividend stocks with yields > 3% that focus on higher yielding opportunities.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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