As of May 23, 2025, Darden Restaurants Inc's estimated intrinsic value ranges from $113.51 to $329.89 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $329.89 | +61.8% |
| Discounted Cash Flow (5Y) | $242.12 | +18.8% |
| Dividend Discount Model (Multi-Stage) | $210.61 | +3.3% |
| Dividend Discount Model (Stable) | $113.51 | -44.3% |
| Earnings Power Value | $125.05 | -38.7% |
Is Darden Restaurants Inc (DRI) undervalued or overvalued?
With the current market price at $203.88, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Darden Restaurants Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.65 | 0.72 |
| Cost of equity | 6.8% | 8.9% |
| Cost of debt | 4.8% | 4.8% |
| Tax rate | 12.3% | 12.5% |
| Debt/Equity ratio | 0.11 | 0.11 |
| After-tax WACC | 6.6% | 8.4% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $242 | $31,841M | 77.8% |
| 10-Year Growth | $330 | $42,113M | 61.1% |
| 5-Year EBITDA | $265 | $34,515M | 79.5% |
| 10-Year EBITDA | $350 | $44,426M | 63.2% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,338M |
| Discount Rate (WACC) | 8.4% - 6.6% |
| Enterprise Value | $15,903M - $20,379M |
| Net Debt | $3,507M |
| Equity Value | $12,397M - $16,872M |
| Outstanding Shares | 117M |
| Fair Value | $106 - $144 |
| Selected Fair Value | $125.05 |
| Metric | Value |
|---|---|
| Market Capitalization | $23860M |
| Enterprise Value | $27367M |
| Trailing P/E | 22.64 |
| Forward P/E | 19.16 |
| Trailing EV/EBITDA | 11.75 |
| Current Dividend Yield | 262.78% |
| Dividend Growth Rate (5Y) | 18.17% |
| Debt-to-Equity Ratio | 0.11 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $98.97 |
| Discounted Cash Flow (5Y) | 25% | $60.53 |
| Dividend Discount Model (Multi-Stage) | 20% | $42.12 |
| Dividend Discount Model (Stable) | 15% | $17.03 |
| Earnings Power Value | 10% | $12.50 |
| Weighted Average | 100% | $231.15 |
Based on our comprehensive valuation analysis, Darden Restaurants Inc's weighted average intrinsic value is $231.15, which is approximately 13.4% above the current market price of $203.88.
Key investment considerations:
Given these factors, we believe Darden Restaurants Inc is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.