Darden Restaurants Inc. stock declined 3.0% in pre-open trading after the company released fiscal fourth-quarter 2026 results that presented a mixed financial picture. Adjusted earnings per share came in at $3.66, narrowly above the consensus forecast of $3.63, while total revenue of $3.72 billion trailed analyst expectations of $3.73 billion.
The revenue shortfall was accompanied by softer-than-expected comparable-store sales in two important business units. Olive Garden reported same-store sales growth of 2.4%, short of the 3.2% that analysts had anticipated. The fine-dining segment, which includes concepts such as The Capital Grille and Ruth’s Chris, recorded comparable-sales growth of 1.9%, underperforming the 3.1% projection.
By contrast, LongHorn Steakhouse was a notable bright spot, delivering same-store sales growth of 9.5% and exceeding the 7.1% estimate. Management also moved to return capital to shareholders, with the board authorizing a new $1.5 billion share repurchase program and raising the quarterly dividend by 8% to $1.62 per share.
For fiscal 2027, Darden provided earnings-per-share guidance in a range of $11.10 to $11.35, topping the analyst consensus of $10.62. Revenue guidance centered near analysts' expectations, with the midpoint viewed as roughly in line with forecasts, which limited the upside from the guidance announcement.
Market sentiment ahead of the release had already shown signs of caution. Evercore ISI downgraded Darden to In Line from Outperform on June 23. Separately, Guggenheim raised its price target on the shares to $235 from $230 while keeping a Buy rating. Those analyst actions, combined with the quarterly results, appeared to shape investor reaction.
The wider market provided little support on the stock's reporting day. In pre-market trade the S&P 500 was down 0.1% and the Nasdaq had declined 0.4%, creating a mildly risk-off backdrop heading into the regular session. There was no clear sector-wide catalyst for restaurant stocks, making the move in Darden's shares primarily a stock-specific response to the earnings release and surrounding analyst commentary.
Weighted together, investors appeared to focus more on the revenue miss, the below-consensus comparable-sales at Olive Garden and the fine-dining portfolio, and the pre-existing downgrade than on the EPS beat, the robust LongHorn performance, and the shareholder-return measures. Shares were trading around $207 in pre-market, under the prior close of $213.45 and near the lower bound of the day's trading range.
Clear summary
Darden reported adjusted EPS of $3.66 versus a $3.63 consensus and revenue of $3.72 billion against $3.73 billion expected. Olive Garden and fine-dining comps lagged expectations while LongHorn outperformed. The company announced a $1.5 billion buyback and an 8% dividend raise, and issued fiscal 2027 EPS guidance above consensus but revenue guidance roughly in line. Shares fell about 3.0% in pre-market trading amid a neutral-to-cautious broader market and an earlier analyst downgrade.
Key points
- Adjusted EPS of $3.66 modestly beat the $3.63 consensus; revenue of $3.72 billion missed the $3.73 billion expectation.
- Comparable-store sales: Olive Garden +2.4% versus +3.2% expected; fine-dining +1.9% versus +3.1% expected; LongHorn +9.5% versus +7.1% expected.
- Board approved a $1.5 billion share repurchase program and raised the quarterly dividend 8% to $1.62 per share; fiscal 2027 EPS guide of $11.10 to $11.35 tops the $10.62 consensus.
Risks and uncertainties
- Near-term revenue growth risk reflected by the slight top-line miss, which could weigh on investor expectations for the restaurant sector and consumer discretionary stocks.
- Comparable-sales softness at Olive Garden and the fine-dining segment introduces uncertainty about demand trends across different dining formats within Darden's portfolio.
- Analyst positioning and guidance interpretation - pre-existing downgrades and mixed guidance create potential for further stock volatility as investors reassess forecasts.