Click to view the earnings moves in DRI
Darden’s Big Drop: Is This Earnings Day Different?
If you’ve watched Darden Restaurants (NYSE:DRI) today, you probably did a double take—the stock plummeted -8.1% after releasing its fiscal Q1 results. The options market was only expecting a ±5.6% move, so this drop is a big surprise. But just how out of the ordinary is a move like this for Darden after earnings? Let’s dig into the numbers, see how DRI usually trades around its earnings days, and why today may stand out.
DRI’s Latest Results: Solid Sales, Tough Reception
Darden reported strong Q1 numbers: total sales climbed 10.4% to $3.0 billion, with same-restaurant sales up across most brands and a blended gain of 4.7%. Adjusted earnings per share grew 12.6% to $1.97. The company even boosted its quarterly dividend to $1.50 and continued its share buybacks.
Despite the upbeat report, investors didn’t buy in. Why the sell-off? Some traders may have focused on the future: while Darden’s sales outlook remains healthy, cautious full-year guidance and cost pressures (including integration costs from the Chuy's acquisition) may have weighed on sentiment.
How DRI Usually Trades Around Earnings
For context, let’s examine DRI’s typical stock action on earnings days using historical performance stats. Over the last 12 quarters, DRI averaged just a +0.7% return on earnings days, and the biggest gap move at the open has only been +1.0% on average. Downward moves actually outnumber up days (58.3% of moves have been negative). The stock often drifts lower into the close after the initial open.
| Stock Performance | Earnings Move | Open Gap | Open to High | Open to Low | Open to Close |
|---|---|---|---|---|---|
| Average Return | +0.7% | +1.0% | +1.6% | -2.9% | -0.3% |
| % of Moves Up | 41.7% | 58.3% | 41.7% | ||
| % of Moves Down | 58.3% | 41.7% | 58.3% |
Source: DRI Historical Earnings Stock Performance
To put today’s -8.1% slide in perspective: not only does it far exceed the usual average earnings move, it’s also bigger than what the options market had priced in. It’s closer to Darden’s historical max one-day earnings moves—showing just how much this result bucked the norm.
| Stock Performance | Earnings Move | Open Gap | Open to High | Open to Low | Open to Close |
|---|---|---|---|---|---|
| Absolute Average Return | 4.6% | 4.8% | 1.6% | 2.9% | 1.9% |
| Max Absolute Return | 14.7% | 12.3% | 5.2% | 4.6% | 3.6% |
| Min Absolute Return | 0.4% | 0.4% | 0.0% | 1.4% | 0.2% |
What Happens After Earnings?
What about after the dust settles? DRI’s track record for post-earnings day action is pretty tepid: on average, the stock is nearly flat the next day (+0.1%) and the percentage of up vs. down moves is roughly balanced—just 45.5% up vs. 54.5% down over several windows after earnings.
| Stock Performance | 1 Day After Earnings | 2 Days After Earnings | 3 Days After Earnings | 1 Week After Earnings | 2 Weeks After Earnings |
|---|---|---|---|---|---|
| Average Return | +0.1% | +0.3% | 0.0% | +0.3% | -1.3% |
| % of Moves Up | 45.5% | 45.5% | 45.5% | 45.5% | 45.5% |
| % of Moves Down | 54.5% | 54.5% | 54.5% | 54.5% | 54.5% |
In short, even though today’s action feels extreme, DRI has been more likely to drift lower after earnings days, but sharp moves like today’s are definitely uncommon in the historical data.
Spotlight: Today’s Most Traded Option
It wasn’t just the stock seeing action—options traders also jumped in, and the single most traded option contract today was the deep-in-the-money 19-Sep-25 200 Put. Here’s a snapshot of today’s hottest option trade:
| Option Contract | 19-Sep-25 200 P |
|---|---|
| Volume | 354 |
| VWAP price | 8.60 |
| Open interest | 137 |
| Yesterday's closing price | 11.20 |
What’s the Takeaway for Traders?
When a stock breaks from its norm—like DRI did today—it can signal an inflection point or just an overreaction. Historically, Darden has leaned a bit more to the downside on earnings, but rarely does it plunge as deeply as it did this quarter. Will DRI revert to its typical post-earnings drift, or does this mark the start of a bigger shift for restaurant stocks? Only time (and the next few trading days) will tell. Curious traders should watch for further price action and see if Darden’s stock rebounds in line with its historical post-earnings moves—or carves a new path.
For a deeper look at DRI’s historical stock reactions to earnings, check out the full stats and charts here.
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