Darden Restaurants Inc (DRI)

Return on sales

Based on the provided data, Darden Restaurants Inc.'s profitability ratios exhibit notable trends over the analyzed periods.

Gross Profit Margin:
The gross profit margin has generally demonstrated an upward trajectory, improving from approximately 19.72% as of August 28, 2022, to reach as high as 46.93% by May 2025. Initial fluctuations show a decline from the high of 19.72% to around 16.56% in late November 2022, followed by a steady recovery and consistent upward trend starting from early 2023. The significant increase in gross margin in the most recent period (from approximately 21% to over 34% and approaching 47%) indicates a substantial enhancement in gross profitability, likely driven by cost control, pricing strategies, or product mix changes.

Operating Profit Margin:
Similar to the gross margin trend, the operating profit margin displays overall improvement, albeit with more modest fluctuations. It increased from approximately 12.25% in August 2022 to peaks of approximately 13.20% in May 2024, before slightly declining toward 11.28% in May 2025. The data suggest that while operating efficiency improved over time, pressure from operating expenses or other factors may have tempered margins in the most recent periods.

Pretax Margin:
Pre-tax margins follow a pattern comparable to operating margins, with an initial decline from about 11.40% in August 2022 to under 8.86% in late 2022, then recovering to a peak of approximately 12.32% in mid-2023. The latest figures indicate a slight decrease to around 9.83% in May 2025, implying stable pre-tax profitability relative to revenues, with some variability likely influenced by changes in operating expenses, non-operating items, or tax effects.

Net Profit Margin:
Net profit margins exhibit similar fluctuations, starting at roughly 9.98% in August 2022, declining to as low as 7.45% toward the end of November 2023, and then gradually improving to approximately 10.47% by May 2024. The most recent data show a slight decrease to about 8.69% in May 2025. The overall pattern indicates that net profitability aligns with the trends observed in gross and operating margins, reflecting the cumulative impact of operating performance, interest, taxes, and other factors.

Overall Summary:
The profitability ratios of Darden Restaurants Inc. suggest a period of initial margin compression in late 2022, followed by a significant recovery and upward trend through mid-2024. The sharp increase in gross profit margin towards the end of the analyzed period may demonstrate successful cost management, pricing strategies, or favorable sales mix, resulting in heightened profitability. Despite some recent declines in net profit margins, the company maintains a generally positive trajectory in profitability ratios, indicating improving efficiency and profitability potential, especially evident in the substantial gross margin expansion observed in the latest periods.

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Return on investment

The profitability ratios of Darden Restaurants Inc. over the analyzed period demonstrate a generally favorable performance trend, with some fluctuations attributable to seasonal factors, operational adjustments, or broader economic conditions.

Operating Return on Assets (Operating ROA):
The Operating ROA exhibits a pattern of cyclical fluctuation within a range approximately between 9.39% and 14.15%. Notably, it reached a peak of 14.15% in May 2023, indicating efficient utilization of assets during that period, coinciding with strategic operational enhancements or favorable sales performance. The ratio declined to around 9.39% in November 2023, suggesting temporary headwinds or normalization post-peak periods. Despite these fluctuations, the ratio maintains a relatively stable trajectory, reflecting consistent operational management in utilizing assets to generate operating income.

Return on Assets (ROA):
The overall ROA mirrors similar cyclical behavior but at somewhat lower levels, ranging from 7.18% to 11.75%. Its peak observed in May 2023 aligns with the peak in Operating ROA, indicating robust asset productivity. The decline to roughly 7.18% in November 2023 underscores periods of reduced asset efficiency, potentially due to increased expenses, strategic repositioning, or seasonal revenue dips.

Return on Total Capital:
This ratio demonstrates higher variability, fluctuating from approximately 36.38% to 69.62%. The upward trend culminates in May 2024, when the ratio approaches nearly 70%, reflecting high profitability relative to total capital employed—comprising debt and equity—likely driven by effective leverage and operational improvements. Conversely, in May 2025, the ratio dips to around 57%, suggesting some erosion in capital efficiency or increased capital base without proportional earnings growth.

Return on Equity (ROE):
The ROE ratio exhibits strong performance throughout, with values generally ranging from about 39.87% to 55.38%. The highest ROE occurs in May 2024 at approximately 55.38%, consistent with peak profitability periods and favorable leverage. The ratios reveal a tendency for profitability margins to diminish over time, with a slight decline observed in May 2025 to around 45.41%, possibly indicating changing capital structures or profit margin adjustments.

Overall Analysis:
The profitability ratios indicate that Darden Restaurants Inc. has maintained a relatively stable and positive profitability profile over the analyzed period. Periodic peaks, such as those observed around May 2023 and May 2024, underscore moments of enhanced operational efficiency, effective asset and capital deployment, and strong profitability margins. The decline in ratios towards late 2023 and into 2025 suggests potential moderations attributable to market conditions, operational costs, or strategic adjustments, yet the ratios remain within favorable ranges. The pattern of high ROE and ROA levels underscores effective management and leveraging strategies, with profitability enhancements aligning with favorable operational periods.