DRI Darden Restaurants Inc

For Immediate Release

Chicago, IL – February 3, 2012 – Zacks Equity Research highlights SLM Corp. ( SLM) as the Bull of the Day and Darden Restaurants, Inc. ( DRI) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Green Mountain Coffee Roasters ( GMCR), Peet's Coffee & Tea Inc. ( PEET) and Starbucks Corporation ( SBUX).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

Sallie Mae, or SLM Corp.'s ( SLM) fourth-quarter 2011 core earnings were a penny above the Zacks Consensus Estimate. Improvements in net interest income, loan loss provision, expenses and discontinued operations supported the core earnings figure. Recently, the company announced a dividend hike and a new share repurchases authorization.

We believe that such shareholder-friendly efforts will give a boost to investors confidence in the stock. Moreover, its leading position in the student lending market, cost curtailment initiatives and the federal student loan assets acquisition augur well. Though pausing new federal student loan origination to comply with the legislation would affect revenue generation at the company, we believe that its diversifying efforts coupled with an economic recovery, though at a sluggish pace, will bolster its earnings.

Our six-month target price of $18.00 equates with 8.7x our earnings estimate for 2012. Combined with a quarterly dividend of $0.125 per share, this target price implies an expected total return of about 22.1% over that period. This is consistent with our Outperform recommendation on the shares.

Bear of the Day:

Although Darden Restaurants, Inc. ( DRI) registered improving blended comparable restaurant sales for the last few quarters, recent woes at Olive Garden continue to nag the company. Stiff competition resulting in higher discounting rates and promotional offers, increasing food costs for the upcoming quarter and cautious consumer spending add to the worry.

Moreover, a recent cut in guidance compels us to downgrade the stock from a Neutral to Underperform recommendation. The company now expects earnings per share from continuing operations to grow 4-7% as against the lower end of 12-15% guided earlier.

Our six-month target price of $40.00 equates to about 11.2x our estimate for 2012. The target price implies an expected total negative return of 9.5% over that period. We recommend an Underperform rating on the shares.

Latest Posts on the Zacks Analyst Blog:

Green Mountain Brews Profits

Green Mountain Coffee Roasters ( GMCR) reported robust first-quarter 2012 results with its adjusted earnings of 60 cents per share, which surged 233% year on year from 18 cents in the prior-year quarter. The adjusted earnings also exceeded the Zacks Consensus Estimate of 36 cents per share.

The adjusted earnings exclude the acquisition-related expenses, expenses related to SEC inquiry, amortization of identifiable intangibles, and gain on sale of subsidiary. Including these one-time items, earnings soared to 66 cents per share as compared to 2 cents per share in the prior-year quarter.

The year-on-year upswing came on the back of success of Keurig Single-Cup Brewing System, supported by owned and non-owned beverage brands in K-Cup packs coupled with strong holiday sales.

In comparison with the first quarter results, Green Mountain projects second quarter 2012 adjusted earnings per share in the range of 60 cents to 65 cents and the ensuing fiscal 2012 adjusted earnings within $2.55–$2.65 per share. The Zacks Consensus Estimate for the next quarter is pegged at 74 cents and $2.57 per share for fiscal 2012.

Our Take

The company is expected to continue to add new brands to the Keurig Single-Cup brewing system, which will help drive incremental brewer adoption, and increase system awareness.

Although Green Mountain enjoys a sound position in a prospering industry with its strategic acquisitions holding out promises, coffee’s vulnerability to highly volatile global prices and presence of tough competitors like Peet's Coffee & Tea Inc. ( PEET) and Starbucks Corporation ( SBUX) concern us.

Currently, Green Mountain holds the Zacks #4 Rank, which translates into a short-term ‘Sell’ rating. Over the long term, we prefer to rate the stock as Neutral.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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DARDEN RESTRNT (DRI): Free Stock Analysis Report
 
GREEN MTN COFFE (GMCR): Free Stock Analysis Report
 
PEETS COFFE&TEA (PEET): Free Stock Analysis Report
 
STARBUCKS CORP (SBUX): Free Stock Analysis Report
 
SLM CORP (SLM): Free Stock Analysis Report
 
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