The stock market often behaves in very peculiar ways. After announcing a modest reduction in revenues and earnings for fiscal 2012, attributed mostly to modest weakness with their Olive Garden Italian restaurant concept, Darden Restaurants, Inc.'s (DRI) is off over 11% today in active trading. We believe this is an overreaction that has created an excellent buying opportunity for the conservative long-term investors seeking capital appreciation and an increasing dividend income stream.

Darden Restaurants Inc. (DRI) is the world's largest full-service restaurant company. Since the first Red Lobster Restaurant opened in Lakeland, Florida in 1968, Darden Restaurants experienced dramatic growth and now operates over 1900 restaurants under the leading full-service brands: Red Lobster, Olive Garden, and Longhorn Steakhouse. Darden's specialty restaurant group includes The Capital Grille, Bahama Breeze, Seasons 52 and the recent acquisition of Eddie V's Prime Seafood and Wildfish Seafood Grille restaurant brands.

In May of 1995 Darden Restaurants became a publicly traded company after General Mills spun it off to shareholders. Since that time Darden Restaurants Inc. has achieved an excellent record of earnings growth which has rewarded shareholders on a total return basis far in excess of the average common stock. In addition to above-average capital appreciation, Darden Restaurants instituted a much more generous dividend policy to further reward shareholders beginning in calendar year 2005. Consequently, Darden has become a strong dividend growth stock.

Management is addressing the issues and has committed to making modifications and investments that they expect will re-establish Olive Garden's historical value advantage. Therefore, they have expressed confidence in the long-term viability and resurgence in growth of not only Olive Garden, but also with their other restaurant concepts as follows:

"We're confident these investments will help Olive Garden get back on track, and we're well positioned to make them," said Otis. "Olive Garden continues to be a value leader and has a strong business model. Further, there's good momentum at our other brands and there's likely to be considerably less cost inflation during the remainder of this fiscal year compared to prior year as costs stabilize at current levels. In addition, our cash flow remains strong and we're continuing to make progress on four key transformative cost reduction projects. These are reasons why, even with the challenges at Olive Garden, we look forward to achieving solid earnings growth in the second half of this fiscal year and beyond."

The following Think F.A.S.T. video through the lens of F.A.S.T. Graphs™ on Darden Restaurants, Inc. (DRI) illuminates the opportunity, by the numbers, after adjusting earnings under Darden's new guidance.

Conclusions

It's an undeniable fact that the stock market is not always rational or efficient. Ben Graham taught us this with his sage words: "In the short run the market is a voting machine, but in the long run it's a weighing machine." With these words, Mr. Graham is telling us that short-term volatility is often the result of the emotional reaction of investors voting with their dollars. However, in the long run the true value, or the weight of the business, will inevitably be reflected in its stock price. We believe Darden Restaurants Inc. (DRI) is a terrific business that today's market reaction has put on sale.

Disclosure: No position at the time of writing.