Darden Shares Surge Following Strong Earnings Report, Potential REIT Separation

reported better-than-expected earnings for its fiscal fourth quarter and announced its plans to separate a portion of its real-estate assets into a REIT. The Orlando, Florida-based company reported quarterly earnings of $105.3 million, or $0.82 per share, compared to $86.5 million, or $0.65 per share, in the year-ago period. Excluding items, the company's earnings climbed to $1.08 per share. Its sales from continuing operations rose 13.8 percent to $1.88 billion. However, analysts were expecting a profit of $0.93 per share on revenue of $1.87 billion. The average estimate among 16 Estimize users was for earnings of $0.93 per share and revenue of $1.88 billion. Darden's total same-store sales gained 3.8 percent in the quarter. Its same-store sales gained 3.4 percent at Olive Garden, while same-store sales rose 5.2 percent at Longhorn Steakhouse. Same-store sales climbed 4.4 percent at The Capital Grille, while same-store sales rose 5.2 percent at Eddie V's. Same-store sales at Bahama Breeze gained 1.7 percent. "We are pleased with our improved performance during the fourth quarter. The momentum we have built during the second half of the fiscal year gives us confidence that our back-to-basics focus – which is rooted in strong operating fundamentals around food, service and atmosphere – is resonating with our guests," said CEO Gene Lee. "We know there is more work to do and still see a lot of opportunity to further strengthen our performance in fiscal 2016." The company expects FY16 adjusted earnings of $3.05 to $3.20 per share, versus analysts' estimates of $2.88 per share. Darden shares gained 6.66 percent to $74.00 in pre-market trading.