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) -- Shares of

Darden Restaurants

(DRI) - Get Free Report

traded lower Wednesday morning after the operator of Olive Garden and Red Lobster restaurants posted weaker-than-expected first-quarter sales.

Darden said late Tuesday its fiscal first-quarter profits grew 19.9% to $113.1 million, or 80 cents per share, easily topping expectations for profits of $110.5 million, or 77 cents per share.

Revenue grew 4.6% to $1.81 billion, but the top-line figure failed to meet analysts' consensus call for sales of $1.82 billion.

Disappointed investors bid Darden shares down 2.1% Wednesday morning.

The all-important metric of comparable same-store sales, or sales at restaurants open at least one year, grew 1.1% at its Olive Garden, Red Lobster and Longhorn Steakhouse restaurants.

Morningstar analysts "were impressed that Darden Restaurants' core brands continued to outpace the peer group average while keeping food and labor costs in check," and the equity research firm maintained its fair value estimate on the stock.

Still, the same-store sales figure fell short of the 2% rise expected by Jefferies.

"The industry is flat. We feel pretty good about

the result," Darden CEO Clarence Otis told



"We think same-store sales will continue to improve throughout the year," Otis said, adding that Darden improved its lead against rivals in the latest quarter.

Darden reaffirmed its 2011 earnings-per-share growth guidance for growth between 14% and 17%, or in a range between $3.24 and $3.32. Wall Street expects Darden to earn $3.32 in fiscal 2011.

Darden also reaffirmed its quarterly dividend of 32 cents per share, to be paid on Nov. 1 to shareholders of record at the close of business on Oct. 8.

Last week restaurant operator Yum! Brands announced

a 19% increase of its quarterly dividend, to 25 cents per share

. The KFC and Taco Bell operator's new payout will be available Nov. 5 to shareholders of record at the close of business on Oct. 15.

>> Yum! Dishes Out Bigger Dividend

Jefferies initiated coverage of


(MCD) - Get Free Report


Chipotle Mexican Grill

(CMG) - Get Free Report

and Yum!, rating the trio hold.

Jefferies put a price target on McDonald's of $75 per share, noting its stock already priced in potential earnings growth.

Chipotle was given a price target of $155, citing that its stock already priced in the company's above-average growth potential.

Yum! was given a price target of $44, noting concern the operator of KFC and Taco Bell restaurants could face margin and currency pressure in the second half of the year.

Fast food stocks have topped headlines in recent weeks after rumors circulated -- and were then confirmed -- that

Burger King had agreed to be taken private


>> Bankruptcy Watch: 20 Riskiest Restaurant Stocks

Elsewhere in the sector,

Wendy's Arby's Group

(WEN) - Get Free Report

said Thursday that rising commodity costs will hit its restaurants in the third and fourth quarters. Wendy's expects a 2% to 3% commodity increase for fiscal 2010. Higher raw food costs would likely undermine profit margins as fast-food restaurants are hesitant to raise prices in a weak economy, according to CFO Stephen E. Hare.

Shares of Yum! and McDonald's fell 0.4% ahead of midday Wednesday while Wendy's lost 1.1% and Chipotle 1%. Burger King gained 0.2%.

-- Written by Miriam Marcus Reimer in New York.

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Miriam Reimer


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