Is Darden Restaurants, Inc. overvalued or undervalued?

As of 20 June 2025, the valuation grade for Darden Restaurants, Inc. has moved from very expensive to expensive, indicating a shift in perception regarding its market value. The company is currently considered overvalued based on its key financial ratios. The P/E ratio stands at 24, while the industry average P/E is significantly lower at approximately 17. The EV to EBITDA ratio is 14.67, which also exceeds the peer average, further supporting the overvaluation stance.
In comparison with peers, Yum China Holdings, Inc. has a P/E of 17.01 and an EV to EBITDA of 8.48, while Domino's Pizza, Inc. shows a higher P/E of 28.24 but a much higher EV to EBITDA of 20.81. These comparisons highlight that Darden's valuation metrics are not only higher than its direct competitors but also suggest that it is priced at a premium relative to the market. Despite a strong return of 44.40% over the past year compared to the S&P 500's 10.26%, the current valuation metrics indicate that Darden Restaurants, Inc. is overvalued.