Darden Restaurants

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Darden Restaurants ( DRI) reported fiscal second quarter earnings on Dec. 20.

Revenue: $1.73 billion, compared with year-earlier sales of $1.64 billion.

Net Income: $74.5 million, compared with year-earlier profits of $60.3 million.

Net Earnings Per Share: 54 cents , compared with year-earlier EPS of 43 cents per share.

Analysis: JPMorgan had an overweight rating on the stock and $56 price target.

Darden Restaurants posted better-than-expected quarterly profits but downwardly revised its guidance for full-year same-store sales growth.

>>Darden Slides on Forecast

"The opportunity for sales upside and opportunity for other cost cuts to offset possible higher commodities in the second half of fiscal 2011 and in fiscal 2012 will be key to the stock's performance in 2011," noted JPMorgan Chase analysts.

Darden said it now expects comps to grow 2% this year, compared with its prior forecast for growth between 2% and 3%.

Darden grew overall comps by 1.4%, including growth of 2% at Olive Garden restaurants and 6.8% at Longhorn Steakhouse, offsetting a 1.6% decline at Red Lobster.

Darden maintained a 32-cent dividend to be paid next on Feb. 1 to shareholders of record on Jan. 10.

Darden also reaffirmed its guidance for fiscal 2011 EPS growth of 14% to 17%, or in a range of $3.26 to $3.35 per share. Analysts' consensus call was at the high end of that range, expecting full-year EPS of $3.35.

"The overall quarter was mixed as generally in-line sales were offset by better store margins," JPMorgan analysts noted, pointing out that performance at "Red Lobster continues to drag on the overall comp."

The analysts added that "we continue to believe the company, along with Texas Roadhouse ( TXRH), has the unique ability to still cut costs vs. peers to offset commodity pressures."

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