Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Darden Restaurants is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Casual dining has seen its ups and downs during the recession and slow recovery, and Darden is no exception. With its numerous chains, including Red Lobster, Olive Garden, and LongHorn Steakhouse, Darden has plenty of exposure to various niches in the casual-dining space. Let's take an early look at what's been happening with Darden Restaurants over the past quarter and what we're likely to see in its quarterly report on Friday.

Stats on Darden Restaurants

Analyst EPS Estimate

$1.01

Change From Year-Ago EPS

(19%)

Revenue Estimate

$2.26 billion

Change From Year-Ago Revenue

4.7%

Earnings Beats in Past 4 Quarters

2


Source: Yahoo! Finance.

Will Darden Restaurants feed its investors well this quarter?
Over the past few months, Darden has made analysts increasingly nervous. They cut back their earnings projections for the just-ended quarter by $0.12 per share, and reduced their calls for fiscal year 2013 by $0.23 and fiscal 2014 by a whopping $0.65. Yet those big reductions haven't sunk the shares, which have risen 4% since mid-December.

Still, Darden has faced some challenging times lately. Last month, the company had to reduce its guidance in light of extremely poor sales during the first few weeks of February. With Olive Garden sales down 9.5% on a 7% drop in traffic, Darden reduced its sales growth call for the year by about 1.5 percentage points. The company also said it would have to open fewer new Olive Garden stores than it had originally thought, cutting back on menu price increases despite pressure from high food costs.

To find growth, Darden is trying to expand outside the U.S., with a new foray into four Latin American countries to open 57 different restaurants in Brazil, Panama, Colombia, and the Dominican Republic. Brazil in particular has gravitated toward U.S. brands, and a growing middle class has made casual-dining restaurants accessible to more people there.

Still, the big question is whether casual dining as a concept is still viable. Panera Bread has given customers a homier atmosphere and arguably healthier food than most casual-dining fare, successfully holding back the tide of tighter margins. Moreover, even though Chipotle has had its own challenges, its fresh ingredients and fast service still command what many diners see as an advantage over Darden's offerings.

In its quarterly report, watch to see how Darden plans to address its operating woes. Unless you see a strategy that makes sense to you, then even with a 4% yield and a relatively cheap valuation, Darden won't be the best stock you can find.

Even as Darden struggles, there's reason to believe that for Panera Bread, the best is still yet to come. The stock has been on an absolute tear over the past five years, and you're invited to find out why -- and what else there is to look forward to -- in The Motley Fool's brand-new premium report on Panera. Included are key areas that investors must watch, as well as opportunities and threats facing the company both today and in the long term. Don't miss out on this invaluable investor's resource -- simply click here now to claim your copy today.

Click here to add Darden Restaurants to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

The article Darden Restaurants Earnings: An Early Look originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Chipotle Mexican Grill and Panera Bread and owns shares of Chipotle Mexican Grill, Darden Restaurants, and Panera Bread. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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