NEW YORK (TheStreet) -- TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, discussed Darden Restaurants (DRI) Monday after it announced it expects to earn 82 cents per share in the third quarter.
Analysts expected the company to earn 93 cents. Darden Restaurants' management blamed, in part, the severe winter weather for the slowdown in traffic.
Despite the lower-than-expected earnings warning, Cramer pointed out that same-store sales are actually improving for Red Lobster, the restaurant segment that is a current spinoff candidate. Same-store sales were down 10% in December and down 12% in January, but increased to down 4.5% in February.
Herein lies the problem with spinning off Red Lobster, Cramer said. When a company spins off a specific entity, it's usually done to unlock value for shareholders. But in this instance, "who would want this Red Lobster piece?" Cramer asked.
While Darden Restaurants would be stronger without Red Lobster, it's hard to imagine anyone would want to be a shareholder or private owner of the struggling seafood restaurant, Cramer concluded.
-- Written by Bret Kenwell in Petoskey, Mich.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV