Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Darden Restaurants, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 9.4% to 5.7% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 3, DPO 18, DIO 12). At a 7.8% WACC with mid-year discounting, the terminal value (79% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 13.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $276.65 per share, suggesting DRI is undervalued by 38.6% at the current price of $199.59.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,903 | 1,975 | 2,088 | 2,222 | 2,350 | 2,409 |
| (−) Net Interest | 138 | 143 | 151 | 161 | 170 | 174 |
| (+) D&A | 512 | 589 | 644 | 668 | 694 | 712 |
| EBITDA | 2,553 | 2,706 | 2,884 | 3,051 | 3,214 | 3,295 |
| (−) Tax | 149 | 154 | 163 | 173 | 183 | — |
| (−) CapEx | 651 | 675 | 714 | 760 | 804 | — |
| (−) ΔWC | -29 | -2 | -4 | -4 | -4 | — |
| Free Cash Flow (FCF) | 1,783 | 1,879 | 2,010 | 2,122 | 2,232 | — |
| Peers' EBITDA Multiple | 13.5x | |||||
| Terminal Value | 44,413 | |||||
| WACC / Discount Rate | 7.83% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,717 | 1,678 | 1,665 | 1,630 | 1,589 | 30,461 |
| Enterprise Value | 38,740 | |||||
| Projection Period | 8,279 | 21.4% | ||||
| Terminal Value | 30,461 | 78.6% | ||||
| (−) Current Net Debt | 5,990 | |||||
| Equity Value | 32,750 | |||||
| (÷) Outstanding Shares | 118M | |||||
| Fair Price | $277 | +38.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 9.5x | 11.5x | 13.5x | 15.5x | 17.5x |
|---|---|---|---|---|---|
| 5.8% | $221 | $263 | $305 | $347 | $389 |
| 6.8% | $211 | $251 | $291 | $331 | $371 |
| 7.8% | $200 | $238 | $277 | $315 | $353 |
| 8.8% | $191 | $227 | $263 | $300 | $336 |
| 9.8% | $181 | $216 | $251 | $286 | $321 |
Current price: $199.59. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.