Entering text into the input field will update the search result below

Darden Restaurants Is Rolling Over, Prepare To Buy Lower

Apr. 04, 2022 4:40 PM ETDarden Restaurants, Inc. (DRI)9 Comments


  • Darden Restaurants is one of America's strongest restaurant stocks, yet its stock price has started to roll over.
  • The entire industry has entered a difficult period with sky-high inflation, imploding consumer confidence, labor shortages, and supply chain issues.
  • I expect the stock to fall to $100-$110 as investors will more than likely re-assess the valuation of consumer-focused stocks like Darden.
  • However, that's good news for value investors, as better prices might be just around the corner.

Olive Garden Restaurant Außenseite in Humble, TX.

Brett_Hondow/iStock Editorial via Getty Images


It's time to talk about one of the most fascinating consumer stocks in America. Darden Restaurants (NYSE:DRI) is a rather straightforward company as it operates restaurants, yet it is delivering so much shareholder value

This article was written by

Leo Nelissen profile picture

Welcome to my Seeking Alpha profile!

I'm a buy-side financial markets analyst specializing in dividend opportunities, with a keen focus on major economic developments related to supply chains, infrastructure, and commodities. My articles provide insightful analysis and actionable investment ideas, with a particular emphasis on dividend growth opportunities. I aim to keep you informed of the latest macroeconomic trends and significant market developments through engaging content. Feel free to reach out to me via DMs or find me on Twitter (@Growth_Value_) for more insights.

Thank you for visiting my profile!

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article serves the sole purpose of adding value to the research process. Always take care of your own risk management and asset allocation.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (9)

GratefulGuy57 profile picture
Agree with the author here. I think by the time the Fed is finished, DRI gives up another $10 or so. I do think there is more fallout for the industry and DRI as a survivor will gain from that. I'm looking at $105 and under to build a position.
great article. i totally agree. a great company with a great mix of places to eat. I picked up shares today at $114.50. Thank you for your observations. it helped.
Leo Nelissen profile picture
@thesingingspy Thank you for your comment! Good luck!
Supercharged222 profile picture
DRI is a quality company that will survive, but the question is where to buy new shares? I pass restaurants in my area and people aren't eating out, places I used to need reservations are taking walk ins. Inflation makes people make decisions about where to spend money, eating out is not a necessity. I'm thinking sub $100... just because of how the market as a whole will be going, Thoughts?
Leo Nelissen profile picture
@Supercharged222 Yes, I think $100-$110 warrants an investment.
To me - Darden has a nice mix of name brands that can increase prices at their higher-end establishments where those clients will pay up. For the other brands - their unique venue should continue to differentiate - such that - the inflationary pressure does NOT remove the clients from eating at those establishments. Thanks for a long-view and not shorting the stock. I will continue to accumulate. Long DRI.
They just have to be the second slowest gazelle in the herd.
There are places selling $15 burgers, and $5 cookies, plus a lot of independents, and high end expense account dependent restaurants which will roll over first.
Not worried about DRI, at 16B when DASH is at 42B market cap.
I expect the stock to fall to $100-$110 as investors will more than likely re-assess the valuation of consumer-focused stocks like Darden.
However, that's good news for value investors, as better prices might be just around the corner."

That is the kind of comment we see too often on these boards, although at least you say "more than likely" rather than something stronger. More than likely, food prices next year will reverse some of their gains - more normal weather in South America and Western Canada, increasing fertilizer output, less impact on food production from Covid, and perhaps more food/fertilizer from Russia/Ukraine.
Then sell a put ratio spread at 100/90 strikes for a credit.. no upside risk, take the daily theta .. ot has to go past to 80 to make a loss.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.