It's been a long, long time since Darden
Although Darden said its earnings increased 11% to $88.5 million, or $0.59 per share, longtime Fool Rick Munarriz pointed out earlier today that stock buybacks helped boost the first-quarter earnings, although several other restaurant companies are doing the same. (Ryan Fuhrmann recently examined some differing views of share buybacks, not all of them as positive as conventional wisdom might have investors believe.) Without the effect of the buybacks, Darden's earnings would have risen a mere 3.5%.
Overall sales at Darden increased 3.3%, helped by strength at Olive Garden despite recent macro concerns with the economy. However, at Red Lobster, one of the company's flagship brands, comps dropped 2.1%. Other concepts under the Darden umbrella include Bahama Breeze and Smokey Bones (where comps increased 1.2% and decreased 8.6%, respectively).
Shareholders can expect a better year from Darden than previously forecast; the company said earnings growth will now come in at 10% to 12% rather than 9% to 10%.
Darden shares have climbed 44% in the last year; one Fool said that Darden was delicious after last quarter's results. Of course, there are different versions of optimism floating around right now. A headline proclaiming that a brokerage firm upgraded Darden actually revealed a story about how said brokerage upgraded the stock from sell to neutral. Not exactly a vote of confidence, but certainly recognition that the stock's been on an upward trajectory lately.
It's not too hard to see why investors have responded positively to Darden, especially given an increased earnings view for the year, but I can't help but contemplate that it has plenty of rivals in casual dining, such as Ruby Tuesday
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Alyce Lomax does not own shares of any of the companies mentioned.