Unlimited soup, salad and breadsticks should be more than enough reason for everyone to love Darden Restaurants� (NYSE:DRI) Olive Garden, but idealism gave way to reality Tuesday as DRI cut next fiscal year�s outlook, with the iconic American Italian eatery shouldering much of the blame.
Darden Restaurants — which also includes national brands Red Lobster and LongHorn Steakhouse — announced it was lowering its EPS expectations, last made in September, from gains of 12%-15% to an increase of 4%-7% for FY12. The company also slightly lowered its revenue expectations.
CEO Clarence Otis said Darden is spending money to help Olive Garden regain its status among value-oriented sit-down restaurants. Olive Garden and Darden�s other restaurants — much like the rest of the country — have continued to feel the pain from rising food costs. Darden Restaurants stock dropped more than 12% on the news to $41.82, nearing a two-month low.
Getting a much-needed shot in the arm Tuesday was oil tanker company Frontline (NYSE:FRO), which gained almost 20% after announcing plans to restructure itself. According to Barron�s, Frontline will �shift some debt and assets to a new entity, allowing the core company to move forward without as much of a debt burden.�
Frontline has had a ruinous 2011 that watched FRO stock lose 85% of its value year-to-date, including a 41% drop Nov. 22 on an earnings miss and a report that the company might run out of cash by 2012. Of course, Frontline stock hasn�t been alone in its plummet, but has paced other sector rivals like Ship Finance International (NYSE:SFL, -44% year-to-date) and Teekay (NYSE:TK, -16% YTD).
Three Up- Orbitz Worldwide (NYSE:OWW): Up 13.68% (48 cents) to $3.99.
- Clearwire� (NASDAQ:CLWR): Up 11.11% (25 cents) to $2.50.
- Hecla Mining (NYSE:HL): Up 9.2% (55 cents) to $6.53.
- Fusion-Io (NYSE:FIO): Down 9.06% ($2.91) to $29.22.
- Pandora (NYSE:P): Down 6.64% (73 cents) to $10.27.
- Suntrust Banks (NYSE:STI): Down 6.43% ($1.24) to $18.03.
As of this writing, Kyle Woodley did not hold a position in any of the aforementioned stocks. Check out our list of previous IP Market Recaps.
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