Darden Restaurants

Methodology

Darden's full-service restaurant portfolio generates relatively stable earnings from brands like Olive Garden and LongHorn Steakhouse, though consumer spending sensitivity creates moderate cyclicality. The company-owned model provides operational control but adds capital intensity versus franchising. Fair value works well when accounting for low-to-mid single-digit earnings growth from unit expansion and menu pricing.

Methodology

Darden typically trades at PEG ratios between 1.2-2.0x, reflecting solid but mature growth in casual dining markets facing headwinds from changing consumer preferences. The company's portfolio management and operational execution support modest premium valuations. PEG works reasonably well, though secular casual dining challenges limit long-term growth potential.

Methodology

Darden pays a dividend yielding 3-4% with consistent growth, making PEGY meaningfully more attractive than PEG for this mature restaurant operator. The stable cash flows from established brands support reliable dividend payments. Total return benefits significantly from yield component given limited organic growth opportunities in competitive casual dining markets.