Jack in the Box, IHOP Beat Estimates

Restaurant chains Jack in the Box Inc. and IHOP Corp. reported earnings Wednesday that beat analysts’ estimates.

But although investors cheered the Jack in the Box results, sending its shares up more than 11%, they were less enthusiastic about IHOP.

Jack in the Box said fiscal first-quarter net income dropped 0.8% to $25.2 million, or 70 cents a share, from $25.4 million, or 68 cents, a year earlier. Per-share earnings beat the 68-cent average forecast of eight analysts surveyed by Thomson Financial. Earnings reflected a buyback of 1.4 million shares.

The San Diego-based hamburger chain also increased its fiscal 2006 forecast to $2.57 to $2.60 a share from November’s $2.50 to $2.54. Jack in the Box shares jumped $4.30 to $42.70 on Wednesday.

Same-store sales increased 5.5% in the quarter ended Jan. 22, aided by sales of burgers and sandwiches on ciabatta bread and a promotion offering curly seasoned fries, the company said.

“You have two things: You have very strong increases in return on capital and net operating profit, and you’ve got a cheap stock,” said Ivan Feinseth, an analyst with Matrix USA in New York, who has a “buy” rating on the shares and doesn’t own any. “We feel the stock is definitely worth $48 right now.”

IHOP said fourth-quarter earnings declined 4.9% to $10 million from $10.5 million a year earlier. Earnings per share rose 53 cents from 52 cents a year earlier as the Glendale-based company repurchased shares. That beat the 51-cent average estimate of six analysts surveyed by Thomson Financial.

IHOP shares fell 23 cents to $49.30.

Feinseth, who has a “strong sell” rating on IHOP, said he saw an opposite trend on that company’s return on capital and net operating income.

“Here’s a company that totally misses out for the most part on the dinner market,” Feinseth said of IHOP, whose restaurants, he says, remain largely known as a breakfast place, which draws the smallest average checks in the restaurant business. “Some people feel there’s an opportunity to totally revamp the company to move the focus away from breakfast,” he said.