JP Morgan Anticipates Darden F4Q11 Earnings

Darden Restaurants, Inc. DRI will report F4Q11 (May) earnings on June 30 after market close, JP Morgan reports. “We expect a solid quarter based on a combination of recent industry sales trends and company-specific cost savings,” JP Morgan writes. “ “We also look for initial F12 guidance to be within the long-term target of 10-15% EPS growth, with management possibly suggesting the lower end of the range as more likely given the current macro environment. “Our expectations are for 11% growth in F12 with consensus at 12% growth. In our view, DRI still has under-appreciated company attributes regarding its ability to cut costs in F12 to offset commodities as well as the benefit from both new units and a heavy remodel plan to drive 6-7% estimated revenue growth while generating a 4.5% FCF yield, including an above-average current 2.6% dividend yield. “With solid visibility to the long-term EPS growth range, we believe the stock looks relatively inexpensive at 12.4x C12 EPS vs. peers at ~17- 17.5x (ex-EAT at ~13x) and Darden's own 13.1x average since 2006 and that current prices therefore offer an attractive buying opportunity.” Darden Restaurants closed Friday at $48.51.