DRIDarden RestaurantsQ3 FY2026Earnings Analysis

MixedFundamentals score5 / 10

How is this scored?

Base score5
Revenue up more than 5% YoY+1
Net income declined YoY-1

Total5 / 10

Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.

Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →

AI Takeaway

DRI posted Q3 FY2026 revenue of $3.35B (+5.9% YoY) driven by top-line growth, but operating income fell 2.8% and net income dropped 5.1% as margin compression and higher costs weighed on profitability.

Revenue

$3.35B

+5.93% YoY

EPS (Diluted)

$2.65

-3.28% YoY

Gross Margin

21.0%

-0.3 pts YoY

Operating Income

$406.4M

-2.82% YoY

Filed Mar 27, 2026 · Analysis updated Jul 3, 2026 · Source: SEC EDGAR 10-Q filing

Next DRI earnings expected Sep 17, 2026

Revenue Growth, Margins & Profitability

Source: SEC XBRL

Darden Restaurants (DRI) reported Q3 FY2026 revenue of $3.35B, up 5.9% year over year. Operating margin was 12.1%, down 1.1 points from 13.2% a year earlier. DRI's fiscal Q3 FY2026 corresponds to calendar Q1 2026.

DRI vs Analyst Expectations

Last 4 quarters: 0 beats

Quarter	Actual EPS (USD)	Consensus (USD)	Result
Jun 2026	3.66	3.67	Miss -0.3%
Mar 2026This filing	2.95	2.97	Miss -0.8%
Dec 2025	2.08	2.12	Miss -2.0%
Sep 2025	1.97	2.02	Miss -2.6%

Adjusted (non-GAAP) EPS of $2.95 versus the $2.97 analyst consensus — a -0.8% miss for Mar 2026. Analyst consensus is quoted on the adjusted (non-GAAP) basis the street uses. GAAP diluted EPS for this quarter was $2.65.

DRI Q3 FY2026 Management Discussion Highlights

Compiled by AI from this SEC filing

Revenue Growth Driven by Top-Line Expansion

DRI grew Q3 FY2026 revenue to $3.35B from $3.16B a year ago, a 5.9% YoY increase, suggesting continued consumer demand for its restaurant brands despite a challenging macro environment.

Source: 10-Q Income Statement Data

Margin Compression Across All Levels

Gross margin declined slightly to 21.0% from 21.3%, operating margin fell more sharply to 12.1% from 13.2%, and net margin came in at 9.2%, indicating cost pressures are outpacing revenue growth and squeezing profitability.

Source: 10-Q Income Statement & Key Ratios

Significant Shareholder Returns via Buybacks and Dividends

On a fiscal year-to-date basis, DRI returned $534.4M through share repurchases (up 45.5% YoY) and paid $521.5M in dividends (up 5.4% YoY), reflecting a strong commitment to capital return even as earnings declined.

Source: 10-Q Cash Flow Statement (YTD)

Investing Activity Moderated Significantly

YTD investing cash outflows narrowed to $523.1M from $1.10B in the prior-year period, a 52.4% improvement, suggesting a pullback in capital expenditure or acquisition activity compared to the prior year.

Source: 10-Q Cash Flow Statement (YTD)

Financing Outflows Surged Due to Capital Return Programs

YTD financing cash outflows increased dramatically to $761.5M from $123.9M, a 514.6% increase, primarily driven by the accelerated share buyback program and steady dividend payments.

Source: 10-Q Cash Flow Statement (YTD)

DRI Q3 FY2026 Risk Factors

Compiled by AI from this SEC filing · 2 high, 2 medium, 1 low

Margin Erosion Risk

high

Operating margin contracted by approximately 110 basis points YoY to 12.1%, and net income fell 5.1% despite a nearly 6% revenue increase. If cost pressures — including labor, food, and occupancy — continue to outpace revenue growth, profitability could deteriorate further.

Source: 10-Q Income Statement & Key Ratios

High Leverage and Low Liquidity

high

DRI's debt-to-equity ratio stands at approximately 5.1x, and its current ratio is only 0.39, meaning current liabilities of $2.61B significantly exceed current assets of $1.01B. This tight liquidity position could limit financial flexibility in a downturn or rising interest rate environment.

Source: 10-Q Balance Sheet Data

Aggressive Capital Return Straining Balance Sheet

medium

YTD share buybacks surged 45.5% to $534.4M while dividends rose to $521.5M, totaling over $1.05B in shareholder returns. Stockholders' equity declined 4.5% YoY to $2.10B, and sustaining this pace of returns could further weaken the equity base.

Source: 10-Q Cash Flow Statement & Balance Sheet

Consumer Spending Sensitivity

medium

As a full-service restaurant operator, DRI is exposed to discretionary consumer spending, which can decline rapidly during economic slowdowns or periods of elevated inflation. Slowing same-restaurant traffic could pressure future revenue growth.

Source: 10-Q Income Statement Data

Rising Depreciation and Amortization Costs

low

D&A increased 7.5% YoY to $141.8M, reflecting ongoing capital investment in restaurant infrastructure. If capital spending remains elevated, D&A will continue to rise, further compressing reported earnings.

Source: 10-Q Cash Flow Statement

DRI Financial Charts & Detailed Metrics

Revenue & Net Income Trend

Margin Trend

View DRI's interactive chart on TradingViewLive price, indicators & drawing tools

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Key Metrics

Income Statement

Metric	Current	Previous	YoY Change
Revenue $B	3.35 $B	3.16 $B	+5.93%
Gross Profit $M	703.60 $M	673.00 $M	+4.55%
Operating Income $M	406.40 $M	418.20 $M	-2.82%
Net Income $M	306.80 $M	323.40 $M	-5.13%
EPS (Basic) $	2.67 $	2.76 $	-3.26%
EPS (Diluted) $	2.65 $	2.74 $	-3.28%

Balance Sheet

Metric	Current	Previous	YoY Change
Total Assets $B	12.89 $B	12.56 $B	+2.61%
Current Assets $B	1.01 $B	0.88 $B	+14.60%
Total Liabilities $B	10.78 $B	10.36 $B	+4.12%
Current Liabilities $B	2.61 $B	2.28 $B	+14.24%
Stockholders' Equity $B	2.10 $B	2.20 $B	-4.49%
Cash & Equivalents $M	240.40 $M	224.20 $M	+7.23%
Long-Term Debt $B	2.14 $B	2.12 $B	+0.85%

Cash Flow

Metric	Current	Previous	YoY Change
Investing Cash Flow $BYTD	-0.52 $B	-1.10 $B	+52.43%
Financing Cash Flow $MYTD	-761.50 $M	-123.90 $M	-514.61%
Dividends Paid $MYTD	521.50 $M	494.60 $M	+5.44%
Share Buybacks $MYTD	534.40 $M	367.20 $M	+45.53%
D&A $M	141.80 $M	131.90 $M	+7.51%

Key Ratios

Metric	Current	Previous	YoY Change
Gross Margin	21.0%	21.3%	-0.3 pts
Operating Margin	12.1%	13.2%	-1.1 pts
Net Margin	9.2%	—	—
ROE	14.6%	—	—
ROA	2.4%	—	—
Current Ratio	0.39	—	—
Debt to Equity	5.13	—	—

DRI Q3 FY2026 Earnings FAQ

Answers draw on this SEC filing and the data on this page

How did DRI perform in Q3 FY2026 earnings?

DRI reported Q3 FY2026 revenue of $3.35B, up 5.9% YoY, but net income declined 5.1% to $306.8M as cost pressures compressed margins. Diluted EPS came in at $2.65, down from $2.74 in the prior-year quarter.

Why did DRI's profits fall in Q3 FY2026 despite higher revenue?

Although revenue grew 5.9%, operating income fell 2.8% and net income dropped 5.1% because costs — including food, labor, and overhead — rose faster than sales. Operating margin contracted from 13.2% to 12.1% YoY, reflecting this margin squeeze.

Is DRI buying back stock in Q3 FY2026?

Yes, on a fiscal year-to-date basis through Q3 FY2026, DRI repurchased $534.4M in shares, a 45.5% increase compared to the same period last year, demonstrating a strong commitment to returning capital to shareholders.

What is DRI's financial health heading into Q3 FY2026?

DRI carries a high debt-to-equity ratio of approximately 5.1x and a very low current ratio of 0.39, meaning its short-term liabilities significantly exceed current assets. While this is common in the restaurant industry, the combination of declining earnings and aggressive capital returns warrants attention.

How much did DRI pay in dividends in Q3 FY2026?

On a fiscal year-to-date basis through Q3 FY2026, DRI paid $521.5M in dividends, up 5.4% compared to the same period in the prior fiscal year, reflecting continued commitment to income-oriented shareholders.

When is the next DRI earnings date?

Darden Restaurants (DRI) is next expected to report earnings on Sep 17, 2026. The date comes from the analyst earnings calendar and can shift until the company confirms it.

More DRI Earnings Reports

DRI FY2026

Darden Restaurants (DRI) delivered strong FY2026 growth, with revenue up 9.4% to $13.21B and diluted EPS up 17.2% to $10.38, supported by same-restaurant sales growth, new units, and a 53rd operating week, while maintaining investment-grade liquidity despite elevated near-term liabilities and planned Bahama Breeze closures.

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DRIDarden RestaurantsQ3 FY2026

MixedFundamentals score5 / 10

How is this scored?

Base score5
Revenue up more than 5% YoY+1
Net income declined YoY-1

Total5 / 10

Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.

Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →

AI Takeaway

Quarter

Actual EPS (USD)

Consensus (USD)

Result

Jun 2026

3.66

3.67

Miss -0.3%

Mar 2026This filing

2.95

2.97

Miss -0.8%

Dec 2025

2.08

2.12

Miss -2.0%

Sep 2025

1.97

2.02

Miss -2.6%

Metric

Current

YoY Change

Revenue $B

3.35

+5.93%

Gross Profit $M

703.60

+4.55%

Operating Income $M

406.40

-2.82%

Net Income $M

306.80

-5.13%

EPS (Basic) $

2.67

-3.26%

EPS (Diluted) $

2.65

-3.28%

Metric

Current

YoY Change

Total Assets $B

12.89

+2.61%

Current Assets $B

1.01

+14.60%

Total Liabilities $B

10.78

+4.12%

Current Liabilities $B

2.61

+14.24%

Stockholders' Equity $B

2.10

-4.49%

Cash & Equivalents $M

240.40

+7.23%

Long-Term Debt $B

2.14

+0.85%

Metric

Current

YoY Change

Investing Cash Flow $BYTD

-0.52

+52.43%

Financing Cash Flow $MYTD

-761.50

-514.61%

Dividends Paid $MYTD

521.50

+5.44%

Share Buybacks $MYTD

534.40

+45.53%

D&A $M

141.80

+7.51%

Metric

Current

YoY Change

Gross Margin

21.0%

-0.3 pts

Operating Margin

12.1%

-1.1 pts

Net Margin

9.2%

—

ROE

14.6%

—

ROA

2.4%

—

Current Ratio

0.39

—

Debt to Equity

5.13

—