MORE BUCKS, MORE BATTER; IHOP EARNINGS SOAR IN 1ST QUARTER.

Byline: Deborah Adamson Daily News Staff Writer

IHOP Corp. on Thursday reported a 40 percent increase in earnings for the first quarter and set a 2-for-1 stock split.

An increase in the number of franchisees and higher prices charged for related equipment boosted the bottom line, according to its quarterly filing with the Securities and Exchange Commission.

``It had its infrastructure set up,'' said Mike Smith, a restaurant analyst with Fahnestock & Co. in Kansas City, Mo. ``As operations grow, the checks get bigger but they don't have to hire more people to open more envelopes.''

The restaurant chain blew away Wall Street's earnings estimate of 53 cents and Smith's own forecast of 59 cents.

IHOP closed at $47, up $3.1875 or 7.3 percent on volume of 190,500 shares, more than seven times its 30-day average.

The company reported net income of $6.6 million (or 65 cents a diluted share) on revenues of $61.3 million. Last year, earnings were $4.7 million (47 cents) on sales of $55.64 million.

Revenues reflect performance at company-owned eateries plus income IHOP gets from its franchisees. It's not the same as systemwide sales, which are sales at company and franchised restaurants.

Systemwide sales rose by 9 percent to $270 million for the quarter compared with a year ago. Same-store sales per restaurant dropped by 0.4 percent.

Same-store sales are those at stores open for at least a year. Analysts consider it a better gauge of performance than overall sales, which includes new restaurants that skew results more positively.

Smith expects growth at IHOP to return to more typical levels for the rest of the year. He believes the first quarter was unusually strong.

He has had a ``buy'' recommendation on the stock for years, which he explains as a rating for good companies that are not overpriced.

Goldman Sachs and Morgan Stanley both recommend ``hold.''

IHOP will split its stock May 27. The split applies to shareholders of record as of May 13. The company will have 20 million shares after the split.

IHOP Chief Executive Richard Herzer said on CNBC that the company's shares are held by large institutional investors who aren't selling shares, prompting the chain to declare a stock split.

The company wants to increase the number of shares available to the public.

CAPTION(S):

Photo, Chart

PHOTO (Color) Richard Herzer, left, CEO of Glendale-based IHOP Corp., jokes with the firm's TV spokesman during a visit to a West Hills eatery in 1997.

Tom Mendoza/Daily News

CHART: STACKING UP

Shares of Glendale-based IHOP Corp. have climbed 24 percent this month.

Daily News