DRI

Darden is a high-quality operator executing its playbook: FY2025 revenue grew 6.0% to $12.1B, net income ticked up 2.1% to $1.05B, and diluted EPS reached $8.86 (+4.1%), helped by a 1.5% reduction in shares outstanding. The five-year arc — revenue from $7.20B (FY2021) to $12.1B (FY2025) and net income from $629M to $1.05B — shows durable demand for Olive Garden/LongHorn even through the post-pandemic inflation cycle. Operating cash flow of $1.71B comfortably funded $645M of capex, $659M of dividends and $418M of buybacks, and ROE of 45.4% is exceptional. That cash-return profile is the core of the bull case.

The MD&A and Risk Factors temper enthusiasm. Management explicitly states Darden 'experienced and continue to experience higher than normal inflationary conditions' in fiscal 2025 across food, labor, healthcare and utilities, and flags that 'introduction of or changes to tariffs' on imported produce and seafood could pressure costs further. That language is consistent with the numbers: gross margin sits at only 20.5% and operating margin at 11.3%, while D&A jumped 12.2% (vs. revenue +6.0%) — a sign the capex cycle is feeding through. Net income grew just 2.1% on 6.0% revenue growth, confirming margin compression is real, not theoretical.