πππ₯π₯π°π· $DRI Implodes -9.7% as EPS Miss Triggers Options Stampede
$Darden Restaurants(DRI)$ $Texas Roadhouse(TXRH)$ $Entertainment Rewards Ltd(EAT.AU)$ Darden Restaurants $DRI just suffered its steepest single-day collapse since March 2022, plunging -9.7% to $188.57 after Q1 FY26 EPS came in light at $1.97 vs. $2.01 est. Revenue was in line at $3.04B, but the stock has now logged five straight red sessions. Options traders swarmed the downside, with put volume exploding 24x normal, heavy clustering at September $185 strikes lit up the tape like a liquidity flush.
π Earnings Snapshot and Segment Trends
EPS missed by 2%, yet net income jumped +24% YoY to $257.9M. Sales rose +10.4% YoY on +4.7% blended SRS, but fine dining (-0.2%) dragged the average. Olive Garden (+5.9%) and LongHorn (+5.5%) carried the load, while the Chuyβs acquisition added to Other Business (+3.3%). This split explains why charts show a violent divergence: core casual dining strength vs. fine dining drag.
π Technical Breakdown: Worst Day Since 2022
The 4H and 30m charts show a clean breakdown from $213 to sub-$190, slicing through EMA 13/21/55, Keltner, and Bollinger bands. A liquidity flush drove the move, with price hitting a low of $188.01 intraday. Traders now eye $185 as key support β if it breaks, continuation risk grows. Volume profiles confirm a capitulation-style flush.
βοΈ Bulls vs. Bears: Key Drivers
Bulls argue casual dining dominance is intact, pointing to Olive Garden and LongHorn outperforming smaller competitors. Management also boosted buybacks to $183M (+6% YoY), signaling confidence. Bears point to sticky inflation (FY26 guide raised to 3.0β3.5%), unchanged EPS outlook at $10.50β$10.70, and persistent fine dining softness. Margin compression risk remains front and center.
π Options Flow and Market Sentiment
Put traders piled in with size: September $185 contracts saw outsized open interest, while flow leaned heavily bearish across near-dated strikes. This aligns with technicals flashing breakdown confirmation. Flow like this often accelerates short-term momentum as dealers hedge.
π‘ Strategic Angle and Guidance Update
FY26 sales growth guidance was raised to 7.5β8.5%, but EPS was left unchanged despite the beat. This signals caution: management is sandbagging, citing reinvestment needs and inflation headwinds. If macro cools, the unchanged EPS bar could set up future beats. But for now, traders are treating it as a credibility reset.
πβ Do you see this as a golden re-entry into Dardenβs casual dining moat, or a warning shot that margin headwinds will dominate FY26?
When Olive Gardenβs unlimited breadsticks canβt soak up unlimited inflation ππ₯π $DRI puts getting feasted on harder than the lunch special.
The market has already repriced the narrative, and the only question left is whether you are positioned on the right side of that repricing.
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- Tui JudeΒ·09-19TOPπ· Iβm with you on the options flow angle, the sheer size of those September 185 puts reminds me of how traders loaded into $EAT contracts ahead of earnings, and the fact $DRI sliced straight through major moving averages shows the marketβs conviction.2Report
- Hen SoloΒ·09-19TOPπ What stood out for me was the split between Olive Garden and LongHornβs strength against fine dining weakness, that divergence feels a lot like when $CMG held up while other restaurant names cracked, and itβs exactly the type of dislocation institutions trade aggressively.2Report
- Cool Cat WinstonΒ·09-19TOPπ Iβm struck by how the fine dining drag at Darden mirrors what weβve seen in $TXRH when higher-end consumers pull back, and the way you tied that to margin pressure makes sense since labor and food costs have been the swing factor in this sector.4Report