Darden Restaurants Inc (DRI)

Interest coverage

		May 31, 2025	Feb 28, 2025	Nov 30, 2024	Aug 31, 2024	May 31, 2024	May 26, 2024	Feb 29, 2024	Feb 25, 2024	Nov 30, 2023	Nov 26, 2023	Aug 31, 2023	Aug 27, 2023	May 31, 2023	May 28, 2023	Feb 28, 2023	Feb 26, 2023	Nov 30, 2022	Nov 27, 2022	Aug 31, 2022	Aug 28, 2022
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,317,600	1,372,000	1,348,300	1,444,000	1,561,300	1,456,600	1,339,700	1,204,800	1,070,300	1,154,900	1,250,900	1,349,200	1,446,200	1,300,000	1,158,700	1,046,800	941,100	1,057,600	1,162,600	1,220,300
Interest expense (ttm)	US$ in thousands	0	35,400	70,800	107,300	143,800	145,900	148,000	141,200	134,400	115,100	78,100	68,000	60,700	62,200	64,200	64,400	61,800	91,900	108,300	106,000
Interest coverage		—	38.76	19.04	13.46	10.86	9.98	9.05	8.53	7.96	10.03	16.02	19.84	23.83	20.90	18.05	16.25	15.23	11.51	10.73	11.51

May 31, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,317,600K ÷ $0K
= —

The analyzed data on Darden Restaurants Inc.'s interest coverage ratios over a series of reporting dates indicates fluctuations in the company's capacity to meet its interest obligations from operating earnings.

Initially, the ratio was approximately 11.51 as of August 28, 2022, and remained consistent at 11.51 on November 27, 2022. This suggests that, at that time, the company was generating earnings before interest and taxes (EBIT) that were about eleven and a half times its annual interest expense, reflecting a comfortable margin of coverage.

Subsequently, the interest coverage rose significantly, reaching a peak of 23.83 as of May 31, 2023. This increase indicates an improvement in operating earnings or a reduction in interest expenses, resulting in enhanced financial stability and lower risk of interest payment default.

However, the coverage experienced a decline thereafter, falling to approximately 16.02 by August 31, 2023, and then further decreasing to around 7.96 by November 30, 2023. Such a downward trend may signal a relative weakening in operating earnings or increased interest obligations, which could elevate the company's financial risk profile if the trend persists.

Interestingly, the ratio shows signs of recovery afterward, climbing to approximately 9.05 as of February 29, 2024, and further rising to roughly 10.86 by May 31, 2024. Continuing this positive trajectory, the ratio reaches 13.46 on August 31, 2024, and further ascends to 19.04 by November 30, 2024. The substantial rise in these later periods suggests a strong improvement in operating earnings or a reduction in interest expenses, restoring a healthy buffer for debt service.

The data also indicates a notable spike in the interest coverage ratio to 38.76 as of February 28, 2025, which could imply a significant boost in earnings or a reduction in interest obligations, representing a very strong financial position in terms of debt serviceability at that point.

In summary, Darden's interest coverage ratios have demonstrated a pattern of fluctuation with periods of both improvement and decline, but overall, the recent trend indicates strengthening coverage and decreasing financial risk from interest obligations. The peak in early 2025 reflects a particularly robust ability to cover interest expenses, reaffirming the company's solid operational performance and potentially improved financial stability during this timeframe.