Ding, ding, ding! Come and get it, investors. Soup's on at Darden Restaurants (NYSE:DRI), which reports its fiscal Q3 2006 earnings tomorrow. What follows is a list of the company's specials. Please sit politely while we go through the whole spiel, before you order your hamburger, fries, and soda.

Wall Street Wisdom:

  • General consensus. Two dozen analysts consider Darden's menu required reading. Reviews are split down the middle, with five buys and five sells. Most analysts sit in the middle of the table with hold ratings.
  • Revenues. Analysts expect to see sales rise 8% against the fiscal Q3 2005 numbers, to $1.49 billion.
  • Earnings. What a difference switching a couple of numbers can make. Last year, Darden earned $0.56 per share. Tomorrow, Wall Street predicts $0.65. Anticipated result: a 16% increase, year over year.

Margin watch:
You might not ordinarily think of the company behind staid dining names like Olive Garden and Red Lobster as a trendsetter. But over the past 18 months, Darden has been bucking its competitors' trend toward flagging profitability. As gross and operating margins slide at Outback Steakhouse (NYSE:OSI), Brinker (NYSE:EAT), and Applebee's (NASDAQ:APPB), Darden's margins keep marching higher.

Margins %

8/04

11/04

2/05

5/05

8/05

11/05

Gross

22.1

22.3

22.4

22.4

22.6

22.6

Op.

8.5

8.7

8.9

9

9.2

9.3

Net

4.6

4.8

4.9

5.5

5.6

5.8
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Foolish lookout:
Let's put all these numbers together, shall we? Darden aims to expand its store count by 4%-5% this year, and to grow comparable sales at existing stores by 4%. It's expanding its profit margins firmwide, and continuing to buying back shares -- concentrating those profits among the shares that remain outstanding. With all these factors in its favor, is it any wonder analysts expect to see strong profits growth tomorrow? Keep an eye on these plans, investors, to see how well Darden has executed them during its latest quarter.

Valuation metrics:
Such stellar performance doesn't go unnoticed long on Wall Street. Over the past year, Darden's shares have climbed 52% in price, leaving the company at a trailing-12-month P/E of 21 as of this writing, and valuing the shares at 24 times trailing free cash flow. Great as this business is, with future growth projected to average closer to 12% per annum, the shares look too pricey to this Fool.

Thanks, but I'll just have a water.

Fool contributor Rich Smith does not own shares of any company named above.