Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Darden Restaurants (NYSE:DRI) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Casual dining has seen its ups and downs during the recession and slow recovery, and Darden is no exception. With its numerous chains, including Red Lobster, Olive Garden, and LongHorn Steakhouse, Darden has plenty of exposure to various niches in the casual-dining space. Let's take an early look at what's been happening with Darden Restaurants over the past quarter and what we're likely to see in its quarterly report on Friday.

Stats on Darden Restaurants

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$2.26 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Darden Restaurants feed its investors well this quarter?
Over the past few months, Darden has made analysts increasingly nervous. They cut back their earnings projections for the just-ended quarter by $0.12 per share, and reduced their calls for fiscal year 2013 by $0.23 and fiscal 2014 by a whopping $0.65. Yet those big reductions haven't sunk the shares, which have risen 4% since mid-December.

Still, Darden has faced some challenging times lately. Last month, the company had to reduce its guidance in light of extremely poor sales during the first few weeks of February. With Olive Garden sales down 9.5% on a 7% drop in traffic, Darden reduced its sales growth call for the year by about 1.5 percentage points. The company also said it would have to open fewer new Olive Garden stores than it had originally thought, cutting back on menu price increases despite pressure from high food costs.

To find growth, Darden is trying to expand outside the U.S., with a new foray into four Latin American countries to open 57 different restaurants in Brazil, Panama, Colombia, and the Dominican Republic. Brazil in particular has gravitated toward U.S. brands, and a growing middle class has made casual-dining restaurants accessible to more people there.

Still, the big question is whether casual dining as a concept is still viable. Panera Bread (NASDAQ:PNRA.DL) has given customers a homier atmosphere and arguably healthier food than most casual-dining fare, successfully holding back the tide of tighter margins. Moreover, even though Chipotle (NYSE:CMG) has had its own challenges, its fresh ingredients and fast service still command what many diners see as an advantage over Darden's offerings.

In its quarterly report, watch to see how Darden plans to address its operating woes. Unless you see a strategy that makes sense to you, then even with a 4% yield and a relatively cheap valuation, Darden won't be the best stock you can find.

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