Saturday, December 18, 2010

Darden Restaurants (NYSE: DRI): Q2 Earnings Preview 2011

Darden Restaurants, Inc. (NYSE: DRI) is scheduled to release its fiscal second-quarter earnings after the closing bell on Monday, December 20, 2010. Analysts, on average, expect the company to report earnings of 24 cents per share on revenue of $1.73 billion. In the year ago period, the company reported earnings of 43 cents per share on revenue of $1.64 billion.

Darden Restaurants, Inc., through its subsidiaries, engages in the ownership and operation of full-service restaurants primarily in the United States and Canada. The company operates restaurants primarily under Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze, and Seasons 52 names.

In the preceding fiscal first quarter, the Orlando, Florida-based company's net income was $113.1 million, or 80 cents a share, compared to $94.3 million, or 67 cents a share, in the year-earlier quarter. Revenue increased to $1.81 billion from $1.73 billion. Analysts, on average, expected the company to report earnings of 47 cents per share on revenue of $122.80 million. 

At its last earnings call in September, the company reaffirmed its 2011 earnings per share growth target in the range of 14% to 17%, based on sales growth expectations in the range of 5.5% to 6.5%, blended same store sales to be up 2% to 3% and opening of 70 to 75 net new restaurants in fiscal 2011. 

The restaurant and food service industry, in which the company operates, is highly competitive, especially within the casual dining sector.  The company also faces callenge from the increasing input prices, which can have a dramatic impact on the sales of the company. In order to cut losses from rising costs, menu item prices have been increased 2-3 percent, annually.

In terms of stock performance, Darden Restaurants shares have gained nearly 40% since the beginning of the year. 

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