Darden Restaurants raises FY26 outlook

What happened: Darden Restaurants (DRI) raised its fiscal 2026 outlook following strong Q4 results, increasing net income, boosting a quarterly cash dividend, and announcing a $1.5 billion share repurchase program. Meanwhile, Chili's parent company, Brinker International (EAT), reported 20 consecutive quarters of same-store sales growth, trading at 11x forward earnings. FedEx (FDX) beat expectations and raised guidance, projecting fiscal 2026 revenue growth of 6% to 6.5%. However, Darden's Olive Garden same-store sales growth fell short of expectations. PepsiCo (PEP) affirmed its fiscal 2026 outlook.

Market impact: These developments indicate strength in the consumer discretionary sector, particularly in restaurants and beverages. DRI's raised outlook and increased dividend signal confidence in the sector's recovery, while FDX's strong performance and guidance raise suggests robust consumer spending. EAT's consistent growth positions it as a strong performer in the casual dining segment. However, Darden's mixed results highlight ongoing challenges in the restaurant industry.

What to watch next: Investors should monitor DRI's full-year 2026 guidance, with the company now projecting net earnings growth of 12% to 14%. Additionally, watch for FDX's fiscal Q4 results and guidance update, as well as EAT's next earnings report to gauge the sustainability of their growth trajectories. PepsiCo's Q2 earnings and guidance will also be crucial for maintaining confidence in the beverage sector.