Darden Restaurants (NYSE: DRI) reported its fiscal year 2016 and fourth quarter earnings today, and while revenues were up for its flagship brand, Olive Garden, they were up even more at some of its other brands, like Seasons 52 and Bahama Breeze.

This is interesting considering that Darden’s quarterly estimates had been up for the past six quarters. That had been touted as being largely due to the strategies implemented that focused on boosting sales at Olive Garden.

 · Earnings’ results

 
The fourth quarter of last year included an extra week of operations resulting in a 53-week fiscal 2015. Darden blamed that extra week of operations included in the fourth quarter of fiscal 2015, as the reason its revenue dipped 4.7% to $1.79 billion. If the impact of the extra week were excluded, the company stated that its total sales increased 2.1%.

During Q4 2016, Darden reported diluted net earnings per share of $1.10, which beat analysts’ estimates by $.02. However, the $1.79 billion in revenue it reported for the year missed estimates by $20 million. Noteworthy is its EPS of $1.10 increasing 19.6% in Q4 2016, compared to Q4 2015, when it was $.92.\

All told, Darden’s revenues were down 4.7% for the three months ended May 31, compared to the same period in fiscal 2015. That includes all of its brands.

For the entire fiscal 2016, revenue increased 2.5% to $6.9 billion, from the roughly $6.8 billion reported for fiscal 2015. Darden noted that the results for the three and 12 month periods ending May 31, 2015 include the additional week of operations.

While revenues for the fiscal year were up 1.7% at Olive Garden, they were up 5.4% at Bahama Breeze and 3.7% at Seasons 52. For the quarter, they were up 2.4% at Olive Garden,4.7% at Bahama Breeze, and 5% Seasons 52.

The fact that the brands outside of the flagship Olive Garden are posting increases in their sales should be considered to be good news. All of them are contributing to Darden’s continued revenue growth.

Back in 2014, activist investor Starboard Value raised its stake in Darden and its actions set the company’s stock price on an upward path of growth.

Starboard implemented a series of operational changes, including what I’ve called “breadstick gate.” After kicking out all of Darden’s board members, Starboard set about dallying around with food preparation, including the restaurant brands’ signature breadsticks.

Little did I know that the change, as well as many others, would be just the right recipe to grow Darden’s shareholder value. The company boasts a market cap of $8.2 billion driven by the performance of hundreds of restaurants throughout the world, including Bahama Breeze, LongHorn Steakhouse and Seasons 52.
 

 · Starboard to the rescue

 
In mid-July of 2014, prior to Starboard’s changes being fully implemented, Darden’s stock was trading around $44 a share. On Wednesday, it closed at $66 a share. In fact, the company has risen almost 50% since Starboard’s intervention, outpacing the S&P 500’s gains of just 6%.

Investors have cheered small and large steps made by the relatively new Darden, as far as its board members are concerned. For example, pre-Starboard intervention, Olive Garden waiters doled out breadsticks to as many requested by diners. The problem with this was diners didn’t eat them all, leaving them to grow cold and less appetizing, leading to waste. To stop this, the company leaned hard on restaurants to serve only one breadstick for every person in the party, plus one.

Furthermore, “refills” were only to made on request; no more of just bring them out to diners because the bread basket was empty.

In addition, to addressing that waste, Olive Garden chefs were introduced better recipes to improve the breadsticks.

The breadstick improvements were listed as part of an extensive plan to cut costs and improve sales. Those changes include whetting the alcohol buds of diners by offering customers who must wait for a table a discount on a glass of wine in hopes that they will order more when they are seated. For a reason beyond my understanding, the Italian-themed restaurant had started offering non-Italian meals. Recognizing that was somewhat counterproductive, Starboard got rid of those menu items.
 

 · What makes Darden attractive

 
In addition to the latest increase in Darden’s revenue, there are several other factors that make it attractive. Many of them were pointed out over the past few weeks by analysts who upgraded the company.

In maintaining its outperform rating on Darden, Oppenheimer found the company to have limited risk to the companies estimates for fiscal 2017. Also, it was believed that Olive Garden will continue to outperform the industry.

Tigress Financial last week upgraded Darden to buy from neutral. Last month, Piper Jaffray upgraded the company to overweight from neutral. It set a price target of $67 to $78 a share.

Deutsche Bank maintained its “buy” rating and $76 price target on the stock ahead of the results.
 

 · Attractive dividend

 
Also attractive for Darden is its dividend. It pays a $2 dividend, with a yield of 2.99%.

Compared to the dividends paid by its competitors, Darden’s is less than stellar. this is despite it having a sizable market cap of $8.2 billion.

For example, DineEquity (NYSE: DNI) pays a $3.68 dividend with a 4.42% yield. Its market cap is $1.5 billion. It owns the International House of Pancakes and Apple’s Neighborhood Grill & Bar.

Another competitor is Brink International (NYSE: EAT), which owns Chili’s Grill & Bar and Maggianos Little Italy. Brink’s market cap is $2.6 billion. Its dividend is $1.28, yielding 2.77%.
 

 · What’s next for Darden

 
This was not exactly the quarter that had been anticipated for Darden, especially considering the EPS miss. However, to its credit, I reiterate that investors should take some solace in the restaurant operator’s ability to raise revenue at
its other restaurant brands.

Investors should also take note of the company’s share buyback program. During Q4 2016, repurchased approximately 0.7 million shares of its common stock for a total cost of approximately $45 million. This leaves roughly $315 million remaining under the current $500 million repurchase authorization.