Surprise, surprise! Good news was reported last week from a company that operates in fickle the consumer discretionary space.

I'm referring to Darden Restaurants Inc. (DRI), which posted a higher quarterly profit on Tuesday.

Best known for its Olive Garden, Red Lobster, LongHorn Steakhouse and Capital Grille chains, Darden earned 78 cents a share (excluding integration costs and purchase accounting adjustments). According to Reuters, estimates, analysts were expecting earnings of 75 cents a share.

Maybe things are looking up in the discretionary spending sector after all!

DRI: Reserve Your Profits Today

DRI said it expects fiscal '09 earnings to grow 14 to 15% or about $3 per. Unlike its casual dining competitor, The Cheesecake Factory (CAKE) that I wrote about the other day (see, "The Cheesecake Factory Inc. (CAKE): Investors Have Their Fill.") Darden has weathered the economic downturn much better and with far less pain to its shareholders.

Of course it's a far larger company and enjoys significant economies of scale that Cheesecake doesn't, but its larger size appears to be paying the dividends stockholders are looking for in tough economic times.

DRI is a well run company with a diverse mix of restaurants in its portfolio that appeal to a broad subset of discerning American tastes. I believe DRI is a solid choice in the crowded casual dining space.

Same-store sales growth rose 5.8% in the Olive Garden chain and fell only 0.2% for higher-priced Red Lobster.

DRI is forecasting same-store sales growth to rise about 2% for Red Lobster, Olive Garden, and the LongHorn Steakhouse in '09.

DRI not only raised its dividend by 11.1%, but plans on buying back $200 million to $225 million of its stock in fiscal '09.

Reserve your table today.

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