Darden Restaurants, Inc. DRI is scheduled to report third-quarter fiscal 2025 results on March 20, before the opening bell.

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In the last reported quarter, the company reported a negative earnings surprise of 1%.

Trend in Estimate Revision of DRI

The Zacks Consensus Estimate for fiscal third-quarter earnings per share (EPS) is pegged at $2.81, indicating an improvement of 7.3% from $2.62 reported in the year-ago quarter.

For revenues, the consensus mark is pegged at $3.21 billion. The projection suggests an 7.9% rise from the year-ago quarter’s reported figure.

Darden Restaurants, Inc. Price and EPS Surprise

Darden Restaurants, Inc. price-eps-surprise | Darden Restaurants, Inc. Quote

Let's take a look at how things have shaped up in the quarter.

Factors Likely to Shape Darden’s Quarterly Results

Darden’s fiscal third-quarter performance is likely to have benefited from strong same-restaurant sales growth, strategic pricing actions and continued operational efficiencies.

Darden’s focus on menu innovation and value offerings may have played a role in driving customer traffic. The company’s efforts to enhance its digital ordering platforms and expand loyalty programs are expected to have contributed to engagement.

Strong contributions from core casual dining brands, including Olive Garden and LongHorn Steakhouse, are likely to have aided DRI’s top line in the fiscal third quarter. Our model predicts revenues from Olive Garden and LongHorn Steakhouse to rise 3.4% and 7% year over year to $1.4 billion and $0.8 billion, respectively. We expect revenues from fine dining to rise 5.7% year over year to $0.4 billion.

Operational enhancements, including supply chain optimization and technology-driven efficiencies, are expected to have improved cost controls in the to-be-reported quarter. The company has been focused on reducing food waste and optimizing kitchen operations, which may have contributed to margin expansion. These initiatives are likely to have supported bottom-line growth. Our model predicts fiscal third-quarter adjusted EBITDA to be $0.55 billion.

Darden continues to navigate macroeconomic headwinds, including persistent inflationary pressures and fluctuations in consumer discretionary spending. Higher labor and commodity costs may have posed challenges to the company’s fiscal third-quarter performance. Our model predicts fiscal third-quarter food and beverage, and labor costs to rise 8.2% and 6.1% year over year to $1 billion each, respectively.

What Our Model Says About DRI Stock

Our proven model does not conclusively predict an earnings beat for Darden this time. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. However, that's not the case here.

Earnings ESP for DRI: Darden has an Earnings ESP of -1.24%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Darden’s Zacks Rank: The company currently has a Zacks Rank #3.

Stocks With the Favorable Combination

Here are some stocks from the Zacks Retail-Wholesale space that investors may consider, as our model shows that these have the right combination of elements to deliver an earnings beat.

CAVA Group, Inc. CAVA currently has an Earnings ESP of +0.17% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

CAVA's earnings for the to-be-reported quarter are expected to rise 16.7% year over year. The company reported an earnings beat in the trailing three quarters and missed once, the average surprise being 62.6%.

Yum China Holdings, Inc. YUMC currently has an Earnings ESP of +1.28% and a Zacks Rank of 3.

YUMC's earnings for the to-be-reported quarter are expected to grow 9.9% year over year. The company reported an earnings beat in the trailing four quarters, the average surprise being 10.3%.

Starbucks Corporation SBUX has an Earnings ESP of +1.19% and a Zacks Rank of 3 at present.

SBUX reported an earnings beat in the trailing three quarters and missed once, the average surprise being negative 2.3%. The company’s earnings for the to-be-reported quarter are expected to fall 23.5% year over year.

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This article originally published on Zacks Investment Research (zacks.com).

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