Word of the Day

Commodity

Even if you don't think you do, you already know plenty about commodities. Want us to prove it? No problem.

What makes oil produced in Saudi Arabia different from oil exported from Nigeria? It's the same thing that makes the corn you ate at last summer¿s barbecue different from the corn used to produce ethanol. Stumped? Well, don't feel bad, it's a trick question. The answer? Absolutely nothing. Corn is corn no matter where it comes from -- just as wheat is wheat and natural gas is -- right! -- natural gas. (Though the quality may differ, the make-up is uniform.)

So, in less elaborate terms, corn and oil (and all other commodities) are homogenous goods that can be processed, resold and more often than not, used as an input to the production of other goods or services. These goods are traded on a commodity exchange, thus setting the price-per-barrel (or other metric unit) used to value them.

Now pay attention, here's a question that indeed does have an answer: What is the difference between a commodity and a stock? While a stock can tank and become worthless, a commodity cannot have its value be wiped to zero. One other difference: Most commodities are traded in futures, meaning traders buy and sell where they think the price of a product will be at a certain point in the future. Stocks trade based on the value of the underlying company at that point in time.

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Tuesday, June 24, 2008

Darden's 4Q Tops Estimates; Boosted by New Chains

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FOXBusiness

Darden Restaurants, operator of the Olive Garden and Red Lobster restaurants, reported an increase in fiscal fourth-quarter profit even as the economy slowed and food prices soared.

Reporting after the market’s close on Tuesday, Darden (DRI) beat the Street by posting adjusted-earnings of 78 cents per share on a 25% jump in sales to $1.83 billion. A year ago, the company earned 67 cents. Analysts polled by Thomson Reuters had been looking for earnings of 75 cents on $1.82 billion in revenue.

Darden, which owns and operates more than 1,300 restaurants in 49 states, was boosted by the addition of recently acquired LongHorn Steakhouse and Capital Grille chains.

While sales from its U.S. Olive Garden locations rose by 5.8% in the fourth quarter, sales at Red Lobster and LongHorn Steakhouse declined.

For the full year, Darden's adjusted-profit rose to $2.74 per share, topping estimates by a penny. Darden's total sales from continuing operations rose by 19% to $6.63 billion.

Darden also upped its quarterly dividend to 20 cents per share, up 11%.

Looking ahead, Darden said it plans to open approximately 75 to 80 new restaurants in fiscal 2009, boosting total sales growth by a range of 14% to 15%.

The market was bullish on Darden’s stock during regular trading on Tuesday, sending the stock up 95 cents, or 3.1%, to $31.60. Shares of Darden have lost almost 30% of their value from a year ago, but are up more than 10% year-to-date.

Darden was also able to beat the Street in its fiscal third-quarter as well, posting an 18% rise in profit.