Modestly Lowering FY4Q26 Estimates; FY27 EPS Faces Margin Risk

研报英文原文证据摘录

Modestly Lowering FY4Q26 Estimates; FY27 EPS Faces Margin Risk

$2,164↓ $2,291↓

We also slightly lower FY4Q26 EPS just below consensus, albeit still above the low end EPS $9.55 $10.59↓ $11.25↓

of DRI's comp guidance and remain within DRI's $3.59-$3.69 EPS guide. SSS 2.0% 4.2%↓ 3.0%

We expect FY27 guidance consistent with DRI's growth algorithm, but EPS Store Count 2,159 2,209 2,282

potentially skewing to the lower end, which would be below consensus. We Consensus Estimates

expect DRI to frame FY27 top-line drivers consistent with its LT algorithm of +1.5-3.5%

2025A 2026E 2027E

comps and 3-4% unit growth. That said, margin assumptions likely should anchor

toward low end of algorithm of 0-20bps expansion reflecting commodity inflation EPS $10.63 $11.39

headwinds. We see COGS inflation +3.0%-3.5% vs. consensus closer to 2% (beef, wheat, Valuation

produce). DRI also could talk down FY1Q27 as spring gas spike typically would hit casual 2025A 2026E 2027E

dining with 2-3 month lag into summer driving, while tax-refund tailwinds fade. P/E 22.4x 20.1x 19.0x

DRI's valuation premium is earned, but largely full, requiring EPS upside to drive EV/EBITDA 5.8x 5.3x 5.0x

shares higher. DRI trades just above 11.5x our FY27E EBITDA, modestly above 11.3x

QTR. EPS Q1 Q2 Q3 Q4

its 10-year average and nearly 50% above the casual dining group. DRI's premium

2025A $1.75 $2.03 $2.80 $2.98multiple is justified owing to its strong brand portfolio, scale, and operating track

record. However, even as the market is willing to push multiples higher in a declining 2026E $1.97a $2.08a $2.95a $3.61

spot gas price environment, our expectation for comps to remain limited in the medium

term makes us less willing, particularly as multiple tends to track OG trends rather than

blended comp.

Key Changes