DRI
Darden Restaurants, Inc.
$193.40
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 30.8% below fair value
You pay
$193.40
Bear
$234.03
Fair
$279.54
Bull
$325.04
Bear
$234.03
+21.0%
$11.42 × 22x P/E
Fair
$279.54
+44.5%
$11.42 × 27x P/E
Bull
$325.04
+68.1%
$11.42 × 31x P/E
Key Value Driver
Normalized P/E multiple (27x base case)
Implied Market Multiple
16.9x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $230.67 from 59 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $279.54 per share.
Warnings
Dividend-based valuation: $381.66 (above our primary estimate by 25%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $230.67 (from 59 analysts). Our estimate is 33% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples